LOAN AND SECURITY AGREEMENT

by and among

SYNALLOY CORPORATION

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

and

FOOTHILL CAPITAL CORPORATION

as Lender

Dated as of July 26, 2002

 

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT

(this "Agreement"), is entered into as of July 26, 2002, between and among,
FOOTHILL CAPITAL CORPORATION, a California corporation ("Lender"), SYNALLOY
CORPORATION, a Delaware corporation ("Parent"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
"Borrowers").

The parties agree as follows:

 1. DEFINITIONS AND CONSTRUCTION.
     1. Definitions. As used in this Agreement, the following terms shall have
        the following definitions:
    
        "Account Debtor" means any Person who is or who may become obligated
        under, with respect to, or on account of, an Account, Chattel Paper, or
        a General Intangible.
    
        "Accounts" means all of Borrowers' now owned or hereafter acquired
        right, title, and interest with respect to "accounts" (as that term is
        defined in the Code), and any and all Supporting Obligations in respect
        thereof.
    
        "ACH Transactions" means any cash management or related services
        (including the Automated Clearing House processing of electronic funds
        transfers through the direct Federal Reserve Fedline system) provided by
        Wells Fargo or its Affiliates for the account of Borrower or its
        Subsidiaries.
    
        "Additional Documents" has the meaning set forth in Section 4.4.
    
        "Administrative Borrower" has the meaning set forth in Section 16.10.
    
        "Advances" has the meaning set forth in Section 2.1.
    
        "Affiliate" means, as applied to any Person, any other Person who,
        directly or indirectly, controls, is controlled by, or is under common
        control with, such Person. For purposes of this definition, "control"
        means the possession, directly or indirectly, of the power to direct the
        management and policies of a Person, whether through the ownership of
        Stock, by contract, or otherwise; provided, however, that, for purposes
        of the definition of Eligible Accounts and Section 7.14 hereof: (a) any
        Person which owns directly or indirectly 10% or more of the securities
        having ordinary voting power for the election of directors or other
        members of the governing body of a Person or 10% or more of the
        partnership or other ownership interests of a Person (other than as a
        limited partner of such Person) shall be deemed to control such Person;
        (b) each director (or comparable manager) of a Person shall be deemed to
        be an Affiliate of such Person; and (c) each partnership or joint
        venture in which a Person is a partner or joint venturer shall be deemed
        to be an Affiliate of such Person.
    
        "Agreement" has the meaning set forth in the preamble hereto.
    
        "Applicable Margin" has the meaning set forth in Section 2.6.
    
        "Applicable Prepayment Premium" means, as of any date of determination,
        an amount equal to (a) during the period of time from and after the date
        of the execution and delivery of this Agreement up to the date that is
        the first anniversary of the Closing Date, 1.0% times the Maximum
        Revolver Amount, and (b) during the period of time from and including
        the date that is the first anniversary of the Closing Date up to the
        Maturity Date, 0.5% times the Maximum Revolver Amount. Notwithstanding
        the foregoing, if Borrowers refinance all of the Obligations hereunder
        from the proceeds of a loan from Carolina First Bank or First Tennessee
        Bank National Association, the Applicable Prepayment Premium shall be
        reduced to zero.
    
        "Assignee" has the meaning set forth in Section 14.1(a).
    
        "Assignment of Life Insurance Policies" means, collectively, each
        Assignment of Life Insurance as Collateral, dated as of the Closing
        Date, between Lender and any Borrower, and acknowledged by the issuer of
        each such Life Insurance Policy, pursuant to which such Borrower assigns
        to Lender all of such Borrower's right, title and interest in the Life
        Insurance Policies, including the cash surrender value thereof.
    
        "Authorized Person" means any officer or other employee of
        Administrative Borrower.
    
        "Availability" means, as of any date of determination, if such date is a
        Business Day, and determined at the close of business on the immediately
        preceding Business Day, if such date of determination is not a Business
        Day, the amount that Borrowers are entitled to borrow as Advances under
        Section 2.1 (after giving effect to all then outstanding Obligations
        (other than Bank Product Obligations) and all sublimits and reserves
        applicable hereunder).
    
        "Bank Product Agreements" means those certain cash management service
        agreements entered into from time to time by any Borrower or its
        Subsidiaries in connection with any of the Bank Products.
    
        "Bank Product Obligations" means all obligations, liabilities,
        contingent reimbursement obligations, fees, and expenses owing by
        Borrowers or their Subsidiaries to Wells Fargo or its Affiliates
        pursuant to or evidenced by the Bank Product Agreements and irrespective
        of whether for the payment of money, whether direct or indirect,
        absolute or contingent, due or to become due, now existing or hereafter
        arising, and including all such amounts that Borrowers are obligated to
        reimburse to Lender as a result of Lender's purchasing participations or
        executing indemnities or reimbursement obligations with respect to the
        Bank Products provided to Borrowers or their Subsidiaries pursuant to
        the Bank Product Agreements.
    
        "Bank Products" means any service or facility extended to Borrowers or
        their Subsidiaries by Wells Fargo or any Affiliate of Wells Fargo
        including: (a) credit cards, (b) credit card processing services, (c)
        debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash
        management, including controlled disbursement, accounts or services, or
        (g) Hedge Agreements.
    
        "Bank Product Reserves" means, as of any date of determination, the
        amount of reserves that Lender has established (based upon Wells Fargo's
        or its Affiliate's reasonable determination of the credit exposure in
        respect of then extant Bank Products) for Bank Products then provided or
        outstanding.
    
        "Bankruptcy Code" means the United States Bankruptcy Code, as in effect
        from time to time.
    
        "Base LIBOR Rate" means the rate per annum, determined by Lender in
        accordance with its customary procedures, and utilizing such electronic
        or other quotation sources as it considers appropriate (rounded upwards,
        if necessary, to the next 1/16%), on the basis of the rates at which
        Dollar deposits are offered to major banks in the London interbank
        market on or about 2:00 p.m. (Atlanta time) 2 Business Days prior to the
        commencement of the applicable Interest Period, for a term and in
        amounts comparable to the Interest Period and amount of the LIBOR Rate
        Loan requested by Administrative Borrower in accordance with this
        Agreement, which determination shall be conclusive in the absence of
        manifest error.
    
        "Base Rate" means, the rate of interest announced within Wells Fargo at
        its principal office in San Francisco as its "prime rate", with the
        understanding that the "prime rate" is one of Wells Fargo's base rates
        (not necessarily the lowest of such rates) and serves as the basis upon
        which effective rates of interest are calculated for those loans making
        reference thereto and is evidenced by the recording thereof after its
        announcement in such internal publication or publications as Wells Fargo
        may designate.
    
        "Base Rate Loan" means each portion of an Advance that bears interest at
        a rate determined by reference to the Base Rate.
    
        "Benefit Plan" means a "defined benefit plan" (as defined in Section
        3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
        Affiliate of any Borrower has contributed or was obligated to contribute
        or has been an "employer" (as defined in Section 3(5) of ERISA) within
        the past 6 years.
    
        "Board of Directors" means the board of directors (or comparable
        managers) of Parent or any committee thereof duly authorized to act on
        behalf thereof.
    
        "Books" means all of each Borrower's and its Subsidiaries' now owned or
        hereafter acquired books and records (including all of its Records
        indicating, summarizing, or evidencing its or their assets (including
        the Collateral) or liabilities, all of such Borrower's or Subsidiaries'
        Records relating to its or their business operations or financial
        condition, and all of its or their goods or General Intangibles related
        to such information).
    
        "Borrower" and "Borrowers" have the respective meanings set forth in the
        preamble to this Agreement.
    
        "Borrowing" means a borrowing hereunder of an Advance.
    
        "Borrowing Base" has the meaning set forth in Section 2.1.
    
        "Borrowing Base Certificate" means a certificate substantially in the
        form of Exhibit B-1 delivered by the chief financial officer or chief
        accounting officer of Parent.
    
        "Business Day" means any day that is not a Saturday, Sunday, or other
        day on which national banks are authorized or required to close, except
        that, if a determination of a Business Day shall relate to a LIBOR Rate
        Loan, the term "Business Day" also shall exclude any day on which banks
        are closed for dealings in Dollar deposits in the London interbank
        market.
    
        "Capital Lease" means a lease that is required to be capitalized for
        financial reporting purposes in accordance with GAAP.
    
        "Capitalized Lease Obligation" means any Indebtedness represented by
        obligations under a Capital Lease.
    
        "Cash Equivalents" means (a) marketable direct obligations issued or
        unconditionally guaranteed by the United States or issued by any agency
        thereof and backed by the full faith and credit of the United States, in
        each case maturing within 1 year from the date of acquisition thereof,
        (b) marketable direct obligations issued by any state of the United
        States or any political subdivision of any such state or any public
        instrumentality thereof maturing within 1 year from the date of
        acquisition thereof and, at the time of acquisition, having the highest
        rating obtainable from either S&P or Moody's, (c) commercial paper
        maturing no more than 270 days from the date of acquisition thereof and,
        at the time of acquisition, having a rating of A-1 or P-1, or better,
        from S&P or Moody's, and (d) certificates of deposit or bankers'
        acceptances maturing within 1 year from the date of acquisition thereof
        either (i) issued by any bank organized under the laws of the United
        States or any state thereof which bank has a rating of A or A2, or
        better, from S&P or Moody's, or (ii) certificates of deposit less than
        or equal to $100,000 in the aggregate issued by any other bank insured
        by the Federal Deposit Insurance Corporation.
    
        "Cash Management Bank" has the meaning set forth in Section 2.7(a).
    
        "Cash Management Account" has the meaning set forth in Section 2.7(a).
    
        "Cash Management Agreements" means those certain cash management service
        agreements, the form and substance of which are satisfactory to Lender,
        each of which is among Administrative Borrower, Lender, and one of the
        Cash Management Banks.
    
        "Change of Control" means (a) any "person" or "group" (within the
        meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
        beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
        directly or indirectly, of 15%, or more, of the Stock of Parent having
        the right to vote for the election of members of the Board of Directors,
        or (b) a majority of the members of the Board of Directors do not
        constitute Continuing Directors, or (c) any Borrower ceases to directly
        own and control 100% of the outstanding capital Stock of each of its
        Subsidiaries extant as of the Closing Date.
    
        "Chattel Paper" means all of Borrowers' now owned or hereafter acquired
        right, title and interest with respect to the "chattel paper," as that
        term is defined in the Code, including, without limitation, tangible
        chattel paper and electronic chattel paper.
    
        "Closing Date" means the date of the making of the initial Advance (or
        other extension of credit) hereunder or the date on which Lender sends
        Borrower a written notice that each of the conditions precedent set
        forth in Section 3.1 either have been satisfied or have been waived.
    
        "Closing Date Business Plan" means the set of Projections of Borrowers
        for the 2 year period following the Closing Date (on a year by year
        basis, and for the 1 year period following the Closing Date, on a month
        by month basis), the form and substance (including as to scope and
        underlying assumptions) of which are satisfactory to Lender.
    
        "Code" means the Georgia Uniform Commercial Code, as in effect from time
        to time.
    
        "Collateral" means all of each Borrower's now owned or hereafter
        acquired right, title, and interest in and to each of the following:
    
         a. Accounts,
         b. Books,
         c. Chattel Paper,
         d. Deposit Accounts, including any DDAs,
         e. Equipment located at the locations set forth on Schedule C-1,
         f. Financial Assets,
         g. General Intangibles,
         h. Inventory,
         i. Investment Property,
         j. Negotiable Collateral,
         k. Supporting Obligations,
         l. any "commercial tort claim," as that term is defined in the Code, as
            set forth on Schedule C-2 attached hereto,
         m. money, cash, Cash Equivalents or other assets of each such Borrower
            that now or hereafter come into the possession, custody, or control
            of Lender, and
         n. the proceeds and products, whether tangible or intangible, of any of
            the foregoing, including proceeds of insurance or commercial tort
            claims, covering any or all of the foregoing, and any and all
            Accounts, Books, Chattel Paper, Deposit Accounts, Equipment,
            Financial Assets, General Intangibles, Inventory, Investment
            Property, Negotiable Collateral, money, Deposit Accounts, or other
            tangible or intangible property resulting from the sale, exchange,
            collection, or other disposition of any of the foregoing, or any
            portion thereof or interest therein, and the proceeds thereof.

"Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment or Inventory, in each case, the form and substance of which are
satisfactory to Lender.

"Collections" means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds) of Borrowers.

"Compliance Certificate" means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Parent to Lender.

"Continuing Director" means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement
thereof.

"Control Agreement" means a control agreement, the form and substance of which
are satisfactory to Lender, executed and delivered by the applicable Borrower,
Lender, and the applicable securities intermediary with respect to a Securities
Account or a bank with respect to a deposit account.

"Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.

"DDA" means any checking or other demand deposit account maintained by any
Borrower.

"Default" means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

"Deposit Accounts" means all of Borrowers' now owned or hereafter acquired
right, title and interest with respect to any "deposit account," as that term is
defined in the Code, including, without limitation, any DDA maintained by
Borrowers.

"Designated Account" means that certain account at the Designated Account Bank
designated as such on Schedule B-1, or such other deposit account of
Administrative Borrower (located within the United States) that has been
designated as such, in writing, by Administrative Borrower to Lender.

"Designated Account Bank" means the depository institution which has been
designated as such on Schedule B-1 or has otherwise been designated as such, in
writing, by Borrower to Lender.

"Dilution" means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 90 days, that is the result of dividing the
Dollar (or Dollar equivalent) amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts of Borrowers during such period, by (b) Borrowers' gross billings with
respect to Accounts during such period (excluding extraordinary items).

"Dilution Reserve" means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by one percentage point for
each percentage point by which Dilution is in excess of 5.0%.

"Disbursement Letter" means an instructional letter executed and delivered by
Administrative Borrower to Lender regarding the extensions of credit to be made
on the Closing Date, the form and substance of which are satisfactory to Lender.

"Dollars" or "$" means United States dollars.

"Due Diligence Letter" means the due diligence letter sent by Lender's counsel
to Administrative Borrower, together with Administrative Borrower's completed
responses to the inquiries set forth therein, the form and substance of such
responses are satisfactory to Lender.

"EBITDA" means, with respect to any fiscal period, Parent's and its Subsidiaries
consolidated net earnings (or loss), minus extraordinary gains, plus interest
expense, income taxes, and depreciation and amortization for such period, as
determined in accordance with GAAP.

"Eligible Accounts" means those Accounts created by one of Borrowers in the
ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit performed by Lender from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:

 a. Accounts that the Account Debtor has failed to pay within 90 days of
    original invoice date or Accounts with selling terms of more than 90 days,
 b. Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
    all Accounts owed by that Account Debtor (or its Affiliates) are deemed
    ineligible under clause (a) above,
 c. Accounts with respect to which the Account Debtor is an employee, Affiliate,
    or Lender of any Borrower,
 d. Accounts arising in a transaction wherein goods are placed on consignment or
    are sold pursuant to a guaranteed sale, a sale or return, a sale on
    approval, a bill and hold (other than as provided in clause (n) below), or
    any other terms by reason of which the payment by the Account Debtor may be
    conditional,
 e. Accounts that are not payable in Dollars,
 f. Accounts with respect to which the Account Debtor either (i) does not
    maintain substantial operations in the United States, or (ii) is not
    organized under the laws of the United States or any state thereof, or (iii)
    is the government of any foreign country or sovereign state, or of any
    state, province, municipality, or other political subdivision thereof, or of
    any department, agency, public corporation, or other instrumentality
    thereof, unless (y) the Account is supported by an irrevocable letter of
    credit satisfactory to Lender (as to form, substance, and issuer or domestic
    confirming bank) that has been delivered to Lender and is directly drawable
    by Lender, or (z) the Account is covered by credit insurance in form,
    substance, and amount, and by an insurer, satisfactory to Lender,
 g. Accounts with respect to which the Account Debtor is either (i) the United
    States or any department, agency, or instrumentality of the United States
    (exclusive, however, of Accounts with respect to which the applicable
    Borrower has complied, to the reasonable satisfaction of Lender, with the
    Assignment of Claims Act, 31 U.S.C. Section 3727 and its related
    regulations), or (ii) any state of the United States (exclusive, however, of
    (y) Accounts owed by any state that does not have a statutory counterpart to
    the Assignment of Claims Act or (z) Accounts owed by any state that does
    have a statutory counterpart to the Assignment of Claims Act as to which the
    applicable Borrower has complied to Lender's satisfaction),
 h. Accounts with respect to which the Account Debtor is a creditor of any
    Borrower, has or has asserted a right of setoff, has disputed its liability,
    or has made any claim with respect to its obligation to pay the Account, to
    the extent of such claim, right of setoff, or dispute,
 i. Accounts with respect to an Account Debtor whose total obligations owing to
    Borrowers exceed 5.0% (such percentage as applied to a particular Account
    Debtor being subject to reduction by Lender in its Permitted Discretion if
    the creditworthiness of such Account Debtor deteriorates) of all Eligible
    Accounts, to the extent of the obligations owing by such Account Debtor in
    excess of such percentage,
 j. Accounts with respect to which the Account Debtor is subject to an
    Insolvency Proceeding, is not Solvent, has gone out of business, or as to
    which a Borrower has received notice of an imminent Insolvency Proceeding or
    a material impairment of the financial condition of such Account Debtor,
 k. Accounts with respect to which the Account Debtor is located in the states
    of New Jersey, Minnesota, or West Virginia (or any other state that requires
    a creditor to file a business activity report or similar document in order
    to bring suit or otherwise enforce its remedies against such Account Debtor
    in the courts or through any judicial process of such state), unless the
    applicable Borrower has qualified to do business in New Jersey, Minnesota,
    West Virginia, or such other states, or has filed a business activities
    report with the applicable division of taxation, the department of revenue,
    or with such other state offices, as appropriate, for the then-current year,
    or is exempt from such filing requirement,
 l. Accounts, the collection of which, Lender, in its Permitted Discretion,
    believes to be doubtful by reason of the Account Debtor's financial
    condition,
 m. Accounts that are not subject to a valid and perfected first priority
    Lender's Lien other than Permitted Liens of the type described in clauses
    (f) and (g) in the definition of "Permitted Liens",
 n. Accounts with respect to which (i) the goods giving rise to such Account
    have not been shipped and billed to the Account Debtor other than goods
    manufactured under agreements, which agreements are satisfactory to Lender
    in its Permitted Discretion, pursuant to which the Account may be billed
    when the goods are produced and held for later shipment to the Account
    Debtor, or (ii) the services giving rise to such Account have not been
    performed and billed to the Account Debtor,
 o. Accounts that represent the right to receive progress payments or other
    advance billings that are due prior to the completion of performance by the
    applicable Borrower of the subject contract for goods or services or that
    are subject to the equitable lien of a surety bond issuer, or
 p. Accounts that are owed to a joint venture in which any Borrower is an
    investor, owner or participant.

"Eligible Inventory" means Inventory of Borrowers consisting of first quality
raw materials and finished goods in Borrowers' metals and chemicals and colors
divisions or held for sale in the ordinary course of Borrowers' business located
at one of the business locations of Borrowers set forth on Schedule E-1 (or
in-transit between any such locations) or Borrowers' stainless work-in-process
inventory, that complies with each of the representations and warranties
respecting Eligible Inventory made by Borrowers in the Loan Documents, and that
is not excluded as ineligible by virtue of one or more of the criteria set forth
below; provided, however, that such criteria may be fixed and revised from time
to time by Lender in Lender's Permitted Discretion to address the results of any
audit or appraisal performed by Lender from time to time after the Closing Date.
In determining the amount to be so included, Inventory shall be valued at the
lower of cost or market on a basis consistent with Borrowers' historical
accounting practices. An item of Inventory shall not be included in Eligible
Inventory if:

 a. a Borrower does not have good, valid, and marketable title thereto,
 b. it is not located at one of the locations in the United States set forth on
    Schedule E-1 or in transit from one such location to another such location,
 c. it is located on real property leased by a Borrower or in a contract
    warehouse, in each case, unless it is subject to a Collateral Access
    Agreement executed by the lessor, warehouseman, or other third party, as the
    case may be, and unless it is segregated or otherwise separately
    identifiable from goods of others, if any, stored on the premises,
 d. it is not subject to a valid and perfected first priority security Lender's
    Lien other than Permitted Liens of the type described in clauses (f) and (g)
    of the definition of "Permitted Liens",
 e. it consists of goods returned or rejected by a Borrower's customers,
 f. it consists of goods that are obsolete or slow moving, restrictive or custom
    items, or goods that constitute spare parts, packaging and shipping
    materials, supplies used or consumed in a Borrower's business, bill and hold
    goods, defective goods, "seconds," or Inventory acquired on consignment,
 g. it consists of goods that are work-in-process (other than stainless
    work-in-process Inventory that otherwise constitutes Eligible Inventory).
 h. it is located at any location (excluding Borrowers' leased facility located
    in Dalton, Georgia) that contains Inventory of Borrowers, which Inventory is
    not otherwise excluded as ineligible by virtue of one or more of the
    criteria set forth herein, with an aggregate book value of less than
    $100,000,
 i. it consists of labor or overhead attributable to raw materials or finished
    goods Inventory owned by third parties, including without limitation "toll"
    inventory,
 j. it consists of goods to be sold to third parties through application of a
    private label, or

(j) it consists of goods in the possession of third parties on a consignment
basis.

"Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of any Borrower or any Subsidiary of a Borrower or any predecessor in interest,
(b) from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by any Borrower or any predecessor
in interest.

"Environmental Law" means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers or any
Subsidiary of a Borrower, relating to the environment, employee health and
safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the Emergency
Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et
seq.; the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 et seq.;
and the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq. (to
the extent it regulates occupational exposure to Hazardous Materials); any state
and local or foreign counterparts or equivalents, in each case as amended from
time to time.

"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.

"Environmental Lien" means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

"Equipment" means all of Borrowers' now owned or hereafter acquired right,
title, and interest with respect to equipment, machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), tools,
parts, goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

"ERISA Affiliate" means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of a Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which a Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with a
Borrower and whose employees are aggregated with the employees of a Borrower
under IRC Section 414(o).

"ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, (b) the withdrawal of any Borrower, any of such Borrower's
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041 (c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of any Borrower, any of such Borrower's Subsidiaries or ERISA Affiliates
from a Multiemployer Plan, or (g) providing any security to any plan under
Section 401(a)(29) of the IRC by any Borrower or any of its Subsidiaries or any
of their ERISA Affiliates.

"Event of Default" has the meaning set forth in Section 8.

"Excess Availability" means the amount, as of the date any determination thereof
is to be made, equal to Availability minus the aggregate amount, if any, of all
trade payables of Borrowers aged in excess of their historical levels with
respect thereto and all book overdrafts in excess of their historical practices
with respect thereto, in each case as determined by Lender in its Permitted
Discretion.

"Exchange Act" means the Securities Exchange Act of 1934, as in effect from time
to time.

"Existing Lender" means Wachovia Bank, N.A.

"Fee Letter" means that certain fee letter, dated as of even date herewith,
between Borrowers and Lender, the form and substance of which are satisfactory
to Lender.

"FEIN" means Federal Employer Identification Number.

"Financial Asset" means all of Borrowers' now owned or hereafter acquired right,
title and interest with respect to any "financial asset" as that term is defined
in the Code.

"Funding Date" means the date on which a Borrowing occurs.

"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).

"GAAP" means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

"General Intangibles" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to general intangibles (including
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill,
patents, trade names, trademarks, servicemarks, copyrights, domain names,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, dividends or other payments from any
Subsidiary, insurance premium rebates, cash surrender value of insurance
policies, tax refunds, and tax refund claims), and any and all Supporting
Obligations in respect thereof, and any other personal property other than
goods, Accounts, Investment Property, Negotiable Collateral and Chattel Paper.

"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, bylaws, or other organizational documents of such
Person.

"Governmental Authority" means any federal, state, local, or other governmental
or administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.

"Guarantor" or "Guarantors" means each of Delmet, Inc., a Delaware corporation,
Delsoap, Inc., a Delaware corporation, Manufacturers Soap & Chemical Company, a
Tennessee corporation, Metchem, Inc., a Delaware corporation, Synalloy Metals,
Inc., a Tennessee corporation, and Whiting Metals, Inc., a South Carolina
corporation.

"Guaranty" means that certain general continuing guaranty executed and delivered
by, Guarantors in favor of Lender, the form and substance of which are
satisfactory to Lender.

"Guarantor Security Agreement" means that certain guarantor security executed
and delivered by Guarantors and Lender, the form and substance of which are
satisfactory to Lender.

"Hazardous Materials" means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

"Hedge Agreement" means any and all transactions, agreements, or documents now
existing or hereafter entered into between Borrower or its Subsidiaries and
Wells Fargo or its Affiliates, which provide for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging Borrower's or its Subsidiaries' exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.

"Indebtedness" means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of a Borrower or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.

"Indemnified Liabilities" has the meaning set forth in Section 11.3.

"Indemnified Person" has the meaning set forth in Section 11.3.

"Insolvency Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

"Intangible Assets" means, with respect to any Person, that portion of the book
value of all of such Person's assets that would be treated as intangibles under
GAAP.

"Intercompany Subordination Agreement" means a subordination agreement executed
and delivered by Borrowers and Lender, the form and substance of which are
satisfactory to Lender.

"Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that 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, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, or 3 months after the date
on which the Interest Period began, as applicable, and (e) Borrowers (or
Administrative Borrower on behalf thereof) may not elect an Interest Period
which will end after the Maturity Date.

"Inventory" means all Borrowers' now owned or hereafter acquired right, title,
and interest with respect to inventory, including goods held for sale or lease
or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in a
Borrower's business, including all accessions, additions, attachments,
improvements, substitutions and replacements thereto and therefor.

"Investment" means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business, and (b) bona fide Accounts arising in the ordinary course of
business consistent with past practices), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

"Investment Property" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "investment property" as that term is
defined in the Code, and any and all Supporting Obligations in respect thereof,
including without limitation the Stock of Ta Chen Stainless Pipe Co., Ltd. held
by Borrowers.

"IRC" means the Internal Revenue Code of 1986, as in effect from time to time.

"IRS" means the Internal Revenue Service of the United States

"L/C" has the meaning set forth in Section 2.12(a).

"L/C Disbursement" means a payment made by Lender pursuant to a Letter of
Credit.

"L/C Undertaking" has the meaning set forth in Section 2.12(a).

"Lender" has the meaning set forth in the preamble to this Agreement.

"Lender's Account" means an account at a bank designated by Lender from time to
time as the account into which Borrowers shall make all payments to Lender under
this Agreement and the other Loan Documents; unless and until Lender notifies
Administrative Borrower, Lender's Account shall be that certain deposit account
listed on Schedule A-1.

"Lender's Liens" means the Liens granted by Borrowers or any Guarantor to Lender
under this Agreement or the other Loan Documents.

"Lender Expenses" means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower under any of the Loan
Documents that are paid or incurred by Lender, (b) fees or charges paid or
incurred by Lender in connection with Lender's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
judgment and Uniform Commercial Code searches and including searches with the
patent and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Lender in the
disbursement of funds to or for the account of Borrowers (by wire transfer or
otherwise), (d) charges paid or incurred by Lender resulting from the dishonor
of checks, (e) reasonable costs and expenses paid or incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising, to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Lender related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by Lender in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Lender's relationship with any Borrower or any guarantor of the
Obligations, (h) Lender's reasonable fees and expenses (including attorneys'
fees) incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Lender's reasonable fees and expenses
(including attorneys' fees) incurred in terminating, enforcing (including
attorneys' fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Borrower or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.

"Lender-Related Person" means Lender, Lender's Affiliates, and the officers,
directors, employees, and agents of Lender.

"Letter of Credit" means an L/C or an L/C Undertaking, as the context requires.

"Letter of Credit Usage" means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit plus 100% of the amount of
outstanding time drafts accepted by an Underlying Issuer as a result of drawings
under Underlying Letters of Credit.

"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).

"LIBOR Notice" means a written notice in the form of Exhibit L-1.

"LIBOR Option" has the meaning set forth in Section 2.13(a).

"LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Lender (rounded upwards, if necessary, to the next
1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%
minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.

"LIBOR Rate Loan" means each portion of an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.

"Lien" means any interest in an asset securing an obligation owed to, or a claim
by, any Person other than the owner of the asset, whether such interest shall be
based on the common law, statute, or contract, whether such interest shall be
recorded or perfected, and whether such interest shall be contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances, including the lien or security interest arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, security agreement, conditional sale or trust receipt, or
from a lease, consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.

"Life Insurance Policies" means those key man life insurance policies of
Borrowers described on Schedule L-1.

"Loan Account" has the meaning set forth in Section 2.10.

"Loan Documents" means this Agreement, the Assignment of Life Insurance
Policies, the Bank Product Agreements, the Cash Management Agreements, the
Control Agreements, the Disbursement Letter, the Due Diligence Letter, the Fee
Letter, the Guarantor Security Agreement, the Guaranty, the Letters of Credit,
the Officers' Certificate, the Pledge Agreement, the Intercompany Subordination
Agreement, the Trademark Security Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to Lender, and any other
agreement entered into, now or in the future, by any Borrower and Lender in
connection with this Agreement.

"Material Adverse Change" means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of a Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of Lender's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Lender's Liens with respect to the Collateral
as a result of an action or failure to act on the part of a Borrower.

"Material Contracts" means those contracts identified on Schedule M-1.

"Maturity Date" has the meaning set forth in Section 3.4.

"Maximum Revolver Amount" means $19,000,000.

"Moody's" means Moody's Investors Service, Inc., a Delaware corporation and its
successors.

"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which any Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
6 years.

"Negotiable Collateral" means all of Borrowers' now owned and hereafter acquired
right, title, and interest with respect to letters of credit, letter of credit
rights, instruments, promissory notes, drafts and documents, and any and all
Supporting Obligations in respect thereof.

"Net Liquidation Percentage" means the percentage of the book value of
Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory net of estimated liquidation expenses, such
percentage to be as determined from time to time by a qualified appraisal
company selected by Lender.

"Obligations" means (a) all Advances, debts, principal, interest (including any
interest that, but for the provisions of the Bankruptcy Code, would have
accrued), contingent reimbursement obligations with respect to outstanding
Letters of Credit, premiums, liabilities (including all amounts charged to
Borrowers' Loan Account pursuant hereto), obligations, fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Borrowers to Lender pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Expenses that Borrowers are required to pay or reimburse by the Loan Documents,
by law, or otherwise, and (b) all Bank Product Obligations. Any reference in
this Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.

"Officers' Certificate" means the representations and warranties of officers in
the form submitted by Lender to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses are satisfactory to Lender.

"Organizational I.D. Number" means, with respect to any Person, the
organizational identification number assigned to such Person by the applicable
governmental unit or agency of the jurisdiction of organization of such Person.

"Parent" has the meaning set forth in the preamble to this Agreement.

"Participant" has the meaning set forth in Section 14.1(d).

"Pay-Off Letter" means a letter, the form and substance of which are
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrowers owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Borrowers.

"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title IV of
ERISA, or any successor thereto.

"Permitted Discretion" means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured asset-based lender)
business judgment.

"Permitted Dispositions" means (a) sales or other dispositions by Borrowers or
their Subsidiaries of Equipment that is (i) substantially worn, damaged, or
obsolete in the ordinary course of business or (ii) that is replaced by
Equipment having a greater or equal value within 90 days of the date of the
applicable disposition, (b) sales by Borrowers or their Subsidiaries of
Inventory to buyers in the ordinary course of business, (c) the use or transfer
of money or Cash Equivalents by Borrowers or their Subsidiaries in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
and (d) the licensing by Borrowers or their Subsidiaries, on a non-exclusive
basis, of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business.

"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, and (d) investments by any Borrower in any other Borrower provided
that if any such investment is in the form of Indebtedness, such Indebtedness
investment shall be subject to the terms and conditions of the Intercompany
Subordination Agreement.

"Permitted Liens" means (a) Liens held by Lender, (b) Liens for unpaid taxes
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) Liens set forth
on Schedule P-1, (d) the interests of lessors under operating leases, (e)
purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as such Lien attaches only to the asset purchased or acquired and
the proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids,
tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, and (k) with respect to any Real Property, easements,
rights of way, and zoning restrictions that do not materially interfere with or
impair the use or operation thereof.

"Permitted Protest" means the right of the applicable Borrower or its
Subsidiaries to protest any Lien (other than any such Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Borrower or its Subsidiary, as applicable, in good
faith, and (c) Lender is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Lender's Liens.

"Permitted Purchase Money Indebtedness" means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
amount outstanding at any one time not in excess of $1,000,000.

"Person" means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

"Personal Property Collateral" means all Collateral other than Real Property.

"Pledge Agreement" means, collectively, each Pledge Agreement, the form and
substance of which are satisfactory to Lender, executed and delivered by each
Borrower that owns Stock of a Subsidiary of Parent.

"Projections" means Parent's forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a consistent basis
with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

"Purchase Money Indebtedness" means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

"Real Property" means any estates or interests in real property now owned or
hereafter acquired by any Borrower and the improvements thereto.

"Record" means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

"Remedial Action" means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any other
actions authorized by 42 U.S.C. Section 9601.

"Reportable Event" means any of the events described in Section 4043(c) of ERISA
or the regulations thereunder other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable regulations.

"Required Availability" means (i) Excess Availability, plus (ii) unrestricted
cash and Cash Equivalents, minus (iii) any reserve established at Lender's
Permitted Discretion for third party Indebtedness due or to become due, in an
aggregate amount of not less than $3,000,000.

"Reserve Percentage" means, on any day, for Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as "eurocurrency liabilities") of that Lender, but so long as Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.

"Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.

"Revolver Usage" means, as of any date of determination, the sum of (a) the then
extant amount of outstanding Advances, plus (b) the then extant amount of the
Letter of Credit Usage.

"S&P" means Standard & Poor's Rating Service, a division of The McGraw Hill
Companies, Inc., a New York corporation, and its successors.

"SEC" means the United States Securities and Exchange Commission and any
successor thereto.

"Securities Account" means a "securities account" as that term is defined in the
Code.

"Solvent" means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).

"Stock" means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

"Subsidiary" of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

"Supporting Obligation" means all of Borrowers' now owned or hereafter acquired
right, title and interest with respect to any "supporting obligation" as that
term is defined in the Code.

"Tangible Net Worth" means, as of any date of determination, the result of (a)
the total stockholder's equity of Parent and its Subsidiaries, minus (b) the sum
of (i) all Intangible Assets of Parent and its Subsidiaries, (ii) all of
Parent's prepaid expenses, and (iii) all amounts due to Parent and its
Subsidiaries from Affiliates.

"Taxes" has the meaning set forth in Section 16.5.

"Trademark Security Agreement" means that certain trademark security agreement
executed and delivered by Borrowers party thereto, the form and substance of
which are satisfactory to Lender.

"Underlying Issuer" means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of Lender for
the benefit of Borrowers.

"Underlying Letter of Credit" means a letter of credit that has been issued by
an Underlying Issuer.

"Voidable Transfer" has the meaning set forth in Section 16.8.

"Wells Fargo" means Wells Fargo Bank, National Association, a national banking
association.

 1. Accounting Terms. All accounting terms not specifically defined herein shall
    be construed in accordance with GAAP. When used herein, the term "financial
    statements" shall include the notes and schedules thereto. Whenever the term
    "Borrowers" or the term "Parent" is used in respect of a financial covenant
    or a related definition, it shall be understood to mean Parent and its
    Subsidiaries on a consolidated basis unless the context clearly requires
    otherwise.
 2. Code. Any terms used in this Agreement that are defined in the Code shall be
    construed and defined as set forth in the Code unless otherwise defined
    herein.
 3. Construction. Unless the context of this Agreement or any other Loan
    Document clearly requires otherwise, references to the plural include the
    singular, references to the singular include the plural, the term
    "including" is not limiting, and the term "or" has, except where otherwise
    indicated, the inclusive meaning represented by the phrase "and/or." The
    words "hereof," "herein," "hereby," "hereunder," and similar terms in this
    Agreement or any other Loan Document refer to this Agreement or such other
    Loan Document, as the case may be, as a whole and not to any particular
    provision of this Agreement or such other Loan Document, as the case may be.
    Section, subsection, clause, schedule, and exhibit references herein are to
    this Agreement unless otherwise specified. Any reference in this Agreement
    or in the other Loan Documents to any agreement, instrument, or document
    shall include all alterations, amendments, changes, extensions,
    modifications, renewals, replacements, substitutions, joinders, and
    supplements, thereto and thereof, as applicable (subject to any restrictions
    on such alterations, amendments, changes, extensions, modifications,
    renewals, replacements, substitutions, joinders, and supplements set forth
    herein). Any reference herein to any Person shall be construed to include
    such Person's successors and assigns. Any requirement of a writing contained
    herein or in the other Loan Documents shall be satisfied by the transmission
    of a Record and any Record transmitted shall constitute a representation and
    warranty as to the accuracy and completeness of the information contained
    therein.
 4. Schedules and Exhibits. All of the schedules and exhibits attached to this
    Agreement shall be deemed incorporated herein by reference.

 1. LOAN AND TERMS OF PAYMENT.
     1. Revolver Advances.

Subject to the terms and conditions of this Agreement, and during the term of
this Agreement, Lender agrees to make advances ("Advances") to Borrowers in an
amount at any one time outstanding not to exceed of an amount equal to the
lesser of (i) the Maximum Revolver Amount less the Letter of Credit Usage, or
(ii) the Borrowing Base less the Letter of Credit Usage. For purposes of this
Agreement, "Borrowing Base," as of any date of determination, shall mean the
result of:

(w) the lesser of

(i) 85% of the amount of Eligible Accounts, less the amount, if any, of the
Dilution Reserve, and

(ii) an amount equal to Borrowers' Collections with respect to Accounts for the
immediately preceding 75 day period, plus

(x) the lowest of

(i) the amount set forth in the following table for the applicable period set
forth opposite thereto:

Time Period

Maximum Amount

Closing Date - 9/30/02

$11,000,000

10/1/02 - 12/31/02

$10,812,000

1/1/03 - 3/31/03

$10,624,000

4/1/03 - 6/30/02

$10,436,000

7/1/03 - 9/30/03

$10,248,000

10/1/03 - 12/31/03

$10,058,112

1/1/04 - 3/31/04

$9,870,112

4/1/04 - 6/30/04

$9,682,112

7/1/04 - Maturity Date

$9,500,000

(ii) the sum of (A) 60% times the aggregate cost of Borrowers' eligible
stainless raw materials inventory and Borrowers' eligible stainless finished
goods inventory, plus (B) the lesser of (I) 25% times the cost of Borrowers'
eligible stainless work in process inventory or (II) $1,000,000, plus (C) 50%
times the cost of Borrowers' eligible chemical and colors raw materials and
finished goods inventory,

(iii) 80% times the then extant Net Liquidation Percentage times the book value
of Borrowers' Eligible Inventory as calculated by Lender, and

(iv) 100% of the amount of credit availability created by clause (w) above;
provided that, at the request of Borrowers, for 90 consecutive days during each
12-month period after the Closing Date, which 90-day period shall commence on
the date of the requested adjustment, such percentage may be increased to 125%
of the amount of credit availability created by clause (w) above, plus

(y) so long as Lender has a first priority lien on and security interest in the
Life Insurance Policies, the lesser of

(i) $2,300,000, and

(ii) $95% of the aggregate cash surrender value of the Life Insurance Policies,
minus

(z) the sum of (i) the Bank Product Reserves, and (ii) the aggregate amount of
reserves, if any, established by Lender under Section 2.1(b).

Anything to the contrary in this Section 2.1 notwithstanding, Lender shall have
the right to establish reserves in such amounts, and with respect to such
matters, as Lender in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including reserves with respect to (i)
sums that Borrowers are required to pay (such as taxes, assessments, insurance
premiums, including without limitation premiums with respect to the Life
Insurance Policies, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of this
Agreement or any other Loan Document, and (ii) amounts owing by Borrowers to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which is
specifically identified thereon as entitled to have priority over the Lender's
Liens), which Lien or trust, in the Permitted Discretion of Lender likely would
have a priority superior to the Lender's Liens (such as Liens or trusts in favor
of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing, Lender shall have the right to have
the Inventory reappraised by a qualified appraisal company selected by Lender
from time to time after the Closing Date for the purpose of redetermining the
Net Liquidation Percentage of the Eligible Inventory portion of the Collateral
and, as a result, redetermining the Borrowing Base.

Lender shall have no obligation to make additional Advances hereunder to the
extent such additional Advances would cause the Revolver Usage to exceed the
Maximum Revolver Amount.

Amounts borrowed pursuant to this Section may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.

 1. [Intentionally Omitted.]
 2. Borrowing Procedures and Settlements.
    Procedure for Borrowing
    . Each Borrowing shall be made by a written request by an Authorized Person
    delivered to Lender (which notice must be received by Lender no later than
    1:00 p.m. (Atlanta time) on the Business Day that is the requested Funding
    Date specifying (i) the amount of such Borrowing, and (ii) the requested
    Funding Date, which shall be a Business Day. At Lender's election, in lieu
    of delivering the above-described request in writing, any Authorized Person
    may give Lender telephonic notice of such request by the required time, with
    such telephonic notice to be confirmed in writing within 24 hours of the
    giving of such notice.
    Making of Advances
    . If Lender has received a timely request for a Borrowing in accordance with
    the provisions hereof, and subject to the satisfaction of the applicable
    terms and conditions set forth herein, Lender shall make the proceeds of
    such Advance available to Borrowers on the applicable Funding Date by
    transferring available funds equal to such proceeds to Administrative
    Borrower's Designated Account.

 3. Payments.
    Payments by Borrowers
    . Except as otherwise expressly provided herein, all payments by Borrowers
    shall be made to Lender's Account and shall be made in immediately available
    funds, no later than 2:00 p.m. (Atlanta time) on the date specified herein.
    Any payment received by Lender later than 2:00 p.m. (Atlanta time) shall be
    deemed to have been received on the following Business Day and any
    applicable interest or fee shall continue to accrue until such following
    Business Day.
    Application, and Reversal of Payments
    .

 i. All payments shall be remitted to Lender and all such payments (other than
    payments received while no Default or Event of Default has occurred and is
    continuing and which relate to the payment of principal or interest of
    specific Obligations or which relate to the payment of specific fees), and
    all proceeds of Accounts or other Collateral received by Lender, shall be
    applied as follows:

first
, to pay any Lender Expenses then due to Lender under the Loan Documents, until
paid in full,
second
, to pay any fees then due to Lender under the Loan Documents, until paid in
full,
third
, to pay interest due in respect of Advances until paid in full,
fourth
, to pay the principal of all Advances until paid in full,
fifth
, if an Event of Default has occurred and is continuing, to be held by Lender,
as cash collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
sixth
, to pay any other Obligations until paid in full, and
seventh
, to Borrowers (to be wired to the Designated Account) or such other Person
entitled thereto under applicable law.

 i.   In each instance, so long as no Event of Default has occurred and is
      continuing, Section 2.4(b) shall not be deemed to apply to any payment by
      Borrowers specified by Borrowers to be for the payment of specific
      Obligations then due and payable (or prepayable) under any provision of
      this Agreement.
 ii.  For purposes of the foregoing, "paid in full" means payment of all amounts
      owing under the Loan Documents according to the terms thereof, including
      loan fees, service fees, professional fees, interest (and specifically
      including interest accrued after the commencement of any Insolvency
      Proceeding), default interest, interest on interest, and expense
      reimbursements, whether or not the same would be or is allowed or
      disallowed in whole or in part in any Insolvency Proceeding.
 iii. In the event of a direct conflict between the priority provisions of this
      Section 2.4 and other provisions contained in any other Loan Document, it
      is the intention of the parties hereto that such priority provisions in
      such documents shall be read together and construed, to the fullest extent
      possible, to be in concert with each other. In the event of any actual,
      irreconcilable conflict that cannot be resolved as aforesaid, the terms
      and provisions of this Section 2.4 shall control and govern.

 1. [Intentionally Omitted.]
 2. Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.
    Interest Rates
    . Except as provided in clause (c) below, all Obligations (except for
    undrawn Letters of Credit and except for Bank Product Obligations) that have
    been charged to the Loan Account pursuant to the terms hereof shall bear
    interest on the Daily Balance thereof as follows (i) if the relevant
    Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
    equal to the LIBOR Rate plus the Applicable Margin, and (ii) otherwise, at a
    per annum rate equal to the Base Rate plus the Applicable Margin. As of the
    Closing Date and through and including the date on which the audited
    financial statements are delivered to Lender pursuant to
    Section 6.3(b)
    for fiscal year 2002, the Applicable Margin with respect to Advances that
    are LIBOR Rate Loans shall be the per annum rate of two and three-quarters
    percentage points (2.75%) and the Applicable Margin with respect to Advances
    that are Base Rate Loans shall be the per annum rate of one-quarter of one
    percentage point (0.25%). On the tenth Business Day following the delivery
    of the audited financial statements for fiscal year 2002 and on the tenth
    Business Day following the delivery of unaudited financial statements for
    each fiscal quarter thereafter, the Applicable Margin shall be adjusted to
    be the interest rate margin based upon the Borrowers' EBITDA for the
    12-month period ending on the last day of the fiscal quarter immediately
    preceding such adjustment date, as reflected in such financial statements,
    expressed as a per annum rate of interest as follows:
    
    
    
    If EBITDA for the most recent 12-month period is:
    
    Then the Applicable Margin with
    respect to Base Rate Loans shall be:
    
    Then the Applicable Margin with
    respect to LIBOR Rate Loans shall be:
    
    Greater than or equal to $1,300,000
    
    0.00%
    
    2.50%
    
    Greater than or equal to $750,000 but less than $1,300,000
    
    0.25%
    
    2.75%
    
    Greater than or equal to $500,000 but less than $750,000
    
    0.50%
    
    3.00%
    
    Less than $500,000
    
    0.75%
    
    3.25%
    
    
    
    For the purposes of this Section 2.6(a) only, EBITDA shall not include
    $5,197,687 of asset write-downs booked in June 2002.
    
    In the event Borrowers fail to provide the financial statements referred to
    above in accordance with the terms of Section 6.3(b) hereof, and without
    prejudice to any additional rights under Section 9.1 hereof, the Applicable
    Margin shall be 3.25% with respect to Advances that are LIBOR Rate Loans and
    0.75% with respect to Advances that are Base Rate Loans until 10 Business
    Days after the actual delivery of such statements.
    
    Letter of Credit Fee
    . Borrowers shall pay Lender a Letter of Credit fee (in addition to the
    charges, commissions, fees, and costs set forth in
    Section 2.12(e)
    ) which shall accrue at a rate equal to 2.75% per annum times the Daily
    Balance of the undrawn amount of all outstanding Letters of Credit.
    Default Rate
    . Upon the occurrence and during the continuation of an Event of Default,
     i.  all Obligations (except for undrawn Letters of Credit and except for
         Bank Product Obligations) that have been charged to the Loan Account
         pursuant to the terms hereof shall bear interest on the Daily Balance
         thereof at a per annum rate equal to 4 percentage points above the per
         annum rate otherwise applicable hereunder, and
     ii. the Letter of Credit fee provided for above shall be increased to 4
         percentage points above the per annum rate otherwise applicable
         hereunder.
    
    Payment
    . Interest, Letter of Credit fees, and all other fees payable hereunder
    shall be due and payable, in arrears, on the first day of each month at any
    time that Obligations or obligation to extend credit hereunder are
    outstanding. Borrowers hereby authorize Lender, from time to time, without
    prior notice to Borrowers, to charge such interest and fees, all Lender
    Expenses (as and when incurred), the charges, commissions, fees, and costs
    provided for in
    Section 2.12(e)
    (as and when accrued or incurred), the fees and costs provided for in
    Section 2.11
    (as and when accrued or incurred), and all other payments as and when due
    and payable under any Loan Document (including any amounts due and payable
    to Wells Fargo or its Affiliates in respect of Bank Products up to the
    amount of the then extant Bank Product Reserves) to Borrowers' Loan Account,
    which amounts thereafter shall constitute Advances hereunder and shall
    accrue interest at the rate then applicable to Advances hereunder. Any
    interest not paid when due shall be charged to Borrowers' Loan Account and
    shall thereafter constitute Advances hereunder and shall accrue interest at
    the rate then applicable to Advances that are Base Rate Loans hereunder.
    Computation
    . All interest and fees chargeable under the Loan Documents shall be
    computed on the basis of a 360 day year for the actual number of days
    elapsed. In the event the Base Rate is changed from time to time hereafter,
    the rates of interest hereunder based upon the Base Rate automatically and
    immediately shall be increased or decreased by an amount equal to such
    change in the Base Rate.
    Intent to Limit Charges to Maximum Lawful Rate
    . In no event shall the interest rate or rates payable under this Agreement,
    plus any other amounts paid in connection herewith, exceed the highest rate
    permissible under any law that a court of competent jurisdiction shall, in a
    final determination, deem applicable. Borrowers and Lender, in executing and
    delivering this Agreement, intend legally to agree upon the rate or rates of
    interest and manner of payment stated within it;
    provided
    ,
    however
    , that, anything contained herein to the contrary notwithstanding, if said
    rate or rates of interest or manner of payment exceeds the maximum allowable
    under applicable law, then,
    ipso
    facto
    , as of the date of this Agreement, Borrowers are and shall be liable only
    for the payment of such maximum as allowed by law, and payment received from
    Borrowers in excess of such legal maximum, whenever received, shall be
    applied to reduce the principal balance of the Obligations to the extent of
    such excess.

 3. Cash Management.
     a. Borrowers shall (i) establish and maintain cash management services of a
        type and on terms satisfactory to Lender at one or more of the banks set
        forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
        request in writing and otherwise take such reasonable steps to ensure
        that all of its Account Debtors forward payment of the amounts owed by
        them directly to such Cash Management Bank, and (ii) deposit or cause to
        be deposited promptly, and in any event no later than the first Business
        Day after the date of receipt thereof, all Collections (including those
        sent directly by Account Debtors to a Cash Management Bank) into a bank
        account in Lender's name (a "Cash Management Account") at one of the
        Cash Management Banks.
     b. Each Cash Management Bank shall establish and maintain Cash Management
        Agreements with Lender and Borrowers, the form and substance of which
        are acceptable to Lender. Each such Cash Management Agreement shall
        provide, among other things, that (i) all items of payment deposited in
        such Cash Management Account and proceeds thereof are held by such Cash
        Management Bank Lender or bailee-in-possession for Lender, (ii) the Cash
        Management Bank has no rights of setoff or recoupment or any other claim
        against the applicable Cash Management Account, other than for payment
        of its service fees and other charges directly related to the
        administration of such Cash Management Account and for returned checks
        or other items of payment, and (iii) it immediately will forward by
        daily sweep all amounts in the applicable Cash Management Account to the
        Lender's Account.
     c. So long as no Default or Event of Default has occurred and is
        continuing, Administrative Borrower may amend Schedule 2.7(a) to add or
        replace a Cash Management Account Bank or Cash Management Account;
        provided, however, that (i) such prospective Cash Management Bank shall
        be satisfactory to Lender and Lender shall have consented in writing in
        advance to the opening of such Cash Management Account with the
        prospective Cash Management Bank, and (ii) prior to the time of the
        opening of such Cash Management Account, Borrowers and such prospective
        Cash Management Bank shall have executed and delivered to Lender a Cash
        Management Agreement. Borrowers shall close any of their Cash Management
        Accounts (and establish replacement cash management accounts in
        accordance with the foregoing sentence) promptly and in any event within
        30 days of notice from Lender that the creditworthiness of any Cash
        Management Bank is no longer acceptable in Lender's reasonable judgment,
        or as promptly as practicable and in any event within 60 days of notice
        from Lender that the operating performance, funds transfer, or
        availability procedures or performance of the Cash Management Bank with
        respect to Cash Management Accounts or Lender's liability under any Cash
        Management Agreement with such Cash Management Bank is no longer
        acceptable in Lender's reasonable judgment.
     d. The Cash Management Accounts shall be cash collateral accounts, with all
        cash, checks and similar items of payment in such accounts securing
        payment of the Obligations, and in which Borrowers are hereby deemed to
        have granted a Lien to Lender.

 4. Crediting Payments. The receipt of any payment item by Lender (whether from
    transfers to Lender by the Cash Management Banks pursuant to the Cash
    Management Agreements or otherwise) shall not be considered a payment on
    account unless such payment item is a wire transfer of immediately available
    federal funds made to the Lender's Account or unless and until such payment
    item is honored when presented for payment. Should any payment item not be
    honored when presented for payment, then Borrowers shall be deemed not to
    have made such payment and interest shall be calculated accordingly.
    Anything to the contrary contained herein notwithstanding, any payment item
    shall be deemed received by Lender only if it is received into the Lender's
    Account on a Business Day on or before 2:00 p.m. (Atlanta time). If any
    payment item is received into the Lender's Account on a non-Business Day or
    after 2:00 p.m. (Atlanta time) on a Business Day, it shall be deemed to have
    been received by Lender as of the opening of business on the immediately
    following Business Day.
 5. Designated Account. Lender is authorized to make the Advances, and Lender is
    authorized to issue the Letters of Credit, under this Agreement based upon
    telephonic or other instructions received from anyone purporting to be an
    Authorized Person, or without instructions if pursuant to Section 2.6(d).
    Administrative Borrower agrees to establish and maintain the Designated
    Account with the Designated Account Bank for the purpose of receiving the
    proceeds of the Advances requested by Borrowers and made by Lender
    hereunder. Unless otherwise agreed by Lender and Administrative Borrower,
    any Advance requested by Borrowers and made by Lender hereunder shall be
    made to the Designated Account.
 6. Maintenance of Loan Account; Statements of Obligations. Lender shall
    maintain an account on its books in the name of Borrowers (the "Loan
    Account") on which Borrowers will be charged with all Advances made by
    Lender to Borrowers or for Borrowers' account, the Letters of Credit issued
    by Lender for Borrowers' account, and with all other payment Obligations
    hereunder or under the other Loan Documents (except for Bank Product
    Obligations), including, accrued interest, fees and expenses, and Lender
    Expenses. In accordance with Section 2.8, the Loan Account will be credited
    with all payments received by Lender from Borrowers or for Borrowers'
    account, including all amounts received in the Lender's Account from any
    Cash Management Bank. Lender shall render statements regarding the Loan
    Account to Administrative Borrower, including principal, interest, fees, and
    including an itemization of all charges and expenses constituting Lender
    Expenses owing, and such statements shall be conclusively presumed to be
    correct and accurate and constitute an account stated between Borrowers and
    Lender unless, within 30 days after receipt thereof by Administrative
    Borrower, Administrative Borrower shall deliver to Lender written objection
    thereto describing the error or errors contained in any such statements.
 7. Fees. Borrowers shall pay to Lender the following fees and charges, which
    fees and charges shall be non-refundable when paid (irrespective of whether
    this Agreement is terminated thereafter):
    Unused Line Fee
    . On the first day of each month during the term of this Agreement, an
    unused line fee in the amount equal to 0.25% per annum times the result of
    (a) the Maximum Revolver Amount,
    less
    (b) the sum of (i) the average Daily Balance of Advances that were
    outstanding during the immediately preceding month,
    plus
    (ii) the average Daily Balance of the Letter of Credit Usage during the
    immediately preceding month,
    Fee Letter Fees
    . As and when due and payable under the terms of the Fee Letter, Borrowers
    shall pay to Lender the fees set forth in the Fee Letter, and
    Audit, Appraisal, and Valuation Charges
    . Audit, appraisal, and valuation fees and charges as follows, (i) a fee of
    $850 per day, per auditor, plus out-of-pocket expenses for each Collateral
    or financial audit of a Borrower performed by personnel employed by Lender,
    (ii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for
    each appraisal of the Collateral performed by personnel employed by Lender,
    and (iii) the actual charges paid or incurred by Lender if it elects to
    employ the services of one or more third Persons to perform financial audits
    of Borrowers, to appraise the Collateral, or any portion thereof, or to
    assess a Borrower's business valuation. Borrowers hereby acknowledge that
    Lender shall have the right to conduct Collateral audits and Inventory
    appraisals on a quarterly basis and to conduct Equipment appraisals
    annually, or more frequently if an Event of Default has occurred and is
    continuing.

 8. Letters of Credit

 a. Subject to the terms and conditions of this Agreement, Lender agrees to
    issue letters of credit for the account of Borrowers (each, an "L/C") or to
    purchase participations or execute indemnities or reimbursement obligations
    (each such undertaking, an "L/C Undertaking") with respect to letters of
    credit issued by an Underlying Issuer (as of the Closing Date, the
    prospective Underlying Issuer is to be Wells Fargo) for the account of
    Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
    amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
    Administrative Borrower shall hand deliver or telecopy (or transmit by
    electronic communication, if arrangements for doing so have been approved by
    Lender) to Lender and Lender (reasonably in advance of the requested date of
    issuance, amendment, renewal, or extension) a notice requesting the issuance
    of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to
    be amended, renewed, or extended, the date of issuance, amendment, renewal,
    or extension, the date on which such L/C or L/C Undertaking is to expire,
    the amount of such L/C or L/C Undertaking, the name and address of the
    beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
    and such other information as shall be necessary to prepare, amend, renew,
    or extend such L/C or L/C Undertaking. If requested by Lender, Borrowers
    also shall be an applicant under the application with respect to any
    Underlying Letter of Credit that is to be the subject of an L/C Undertaking.
    Lender shall have no obligation to issue a Letter of Credit if any of the
    following would result after giving effect to the requested Letter of
    Credit:

 i.   the Letter of Credit Usage would exceed the Borrowing Base less the amount
      of outstanding Advances, or
 ii.  the Letter of Credit Usage would exceed $2,000,000, or
 iii. the Letter of Credit Usage would exceed the Maximum Revolver Amount less
      the then extant amount of outstanding Advances.

 a. Borrowers and Lender acknowledge and agree that certain Underlying Letters
    of Credit may be issued to support letters of credit that already are
    outstanding as of the Closing Date. Each Letter of Credit (and corresponding
    Underlying Letter of Credit) shall be in form and substance acceptable to
    Lender (in the exercise of its Permitted Discretion), including the
    requirement that the amounts payable thereunder must be payable in Dollars.
    If Lender is obligated to advance funds under a Letter of Credit, Borrowers
    immediately shall reimburse such L/C Disbursement to Lender by paying to
    Lender an amount equal to such L/C Disbursement not later than 2:00 p.m.,
    Atlanta time, on the date that such L/C Disbursement is made, if
    Administrative Borrower shall have received written or telephonic notice of
    such L/C Disbursement prior to 1:00 p.m., Atlanta time, on such date, or, if
    such notice has not been received by Administrative Borrower prior to such
    time on such date, then not later than 2:00 p.m., Atlanta time, on (i) the
    Business Day that Administrative Borrower receives such notice, if such
    notice is received prior to 1:00 p.m., Atlanta time, on the date of receipt,
    and, in the absence of such reimbursement, the L/C Disbursement immediately
    and automatically shall be deemed to be an Advance hereunder and,
    thereafter, shall bear interest at the rate then applicable to Advances that
    are Base Rate Loans under Section 2.6. To the extent an L/C Disbursement is
    deemed to be an Advance hereunder, Borrowers' obligation to reimburse such
    L/C Disbursement shall be discharged and replaced by the resulting Advance.
 b. Each Borrower hereby agrees to indemnify, save, defend, and hold Lender
    harmless from any loss, cost, expense, or liability, and reasonable
    attorneys fees incurred by Lender arising out of or in connection with any
    Letter of Credit; provided, however, that no Borrower shall be obligated
    hereunder to indemnify for any loss, cost, expense, or liability that is
    caused by the gross negligence or willful misconduct of Lender. Each
    Borrower agrees to be bound by the Underlying Issuer's regulations and
    interpretations of any Underlying Letter of Credit or by Lender's
    interpretations of any L/C issued by Lender to or for such Borrower's
    account, even though this interpretation may be different from such
    Borrower's own, and each Borrower understands and agrees that Lender shall
    not be liable for any error, negligence, or mistake, whether of omission or
    commission, in following Borrowers' instructions or those contained in the
    Letter of Credit or any modifications, amendments, or supplements thereto.
    Each Borrower understands that the L/C Undertakings may require Lender to
    indemnify the Underlying Issuer for certain costs or liabilities arising out
    of claims by Borrowers against such Underlying Issuer. Each Borrower hereby
    agrees to indemnify, save, defend, and hold Lender harmless with respect to
    any loss, cost, expense (including reasonable attorneys' fees), or liability
    incurred by Lender under any L/C Undertaking as a result of Lender's
    indemnification of any Underlying Issuer; provided, however, that no
    Borrower shall be obligated hereunder to indemnify for any loss, cost,
    expense, or liability that is caused by the gross negligence or willful
    misconduct of Lender.
 c. Each Borrower hereby authorizes and directs any Underlying Issuer to deliver
    to Lender all instruments, documents, and other writings and property
    received by such Underlying Issuer pursuant to such Underlying Letter of
    Credit and to accept and rely upon Lender's instructions with respect to all
    matters arising in connection with such Underlying Letter of Credit and the
    related application.
 d. Any and all charges, commissions, fees, and costs incurred by Lender
    relating to Underlying Letters of Credit shall be Lender Expenses for
    purposes of this Agreement and immediately shall be reimbursable by
    Borrowers to Lender for the account of Lender; it being acknowledged and
    agreed by each Borrower that, as of the Closing Date, the issuance charge
    imposed by the prospective Underlying Issuer is .825% per annum times the
    face amount of each Underlying Letter of Credit, that such issuance charge
    may be changed from time to time, and that the Underlying Issuer also
    imposes a schedule of charges for amendments, extensions, drawings, and
    renewals.
 e. If by reason of (i) any change in any applicable law, treaty, rule, or
    regulation or any change in the interpretation or application thereof by any
    Governmental Authority, or (ii) compliance by the Underlying Issuer or
    Lender with any direction, request, or requirement (irrespective of whether
    having the force of law) of any Governmental Authority or monetary authority
    including, Regulation D of the Federal Reserve Board as from time to time in
    effect (and any successor thereto):
     i.  any reserve, deposit, or similar requirement is or shall be imposed or
         modified in respect of any Letter of Credit issued hereunder, or
     ii. there shall be imposed on the Underlying Issuer or Lender any other
         condition regarding any Underlying Letter of Credit or any Letter of
         Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify
Administrative Borrower, and Borrowers shall pay on demand such amounts as
Lender may specify to be necessary to compensate Lender for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Lender of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.

     1. LIBOR Option.
            Interest and Interest Payment Dates
            . In lieu of having interest charged at the rate based upon the Base
            Rate, Borrowers shall have the option (the "
            LIBOR Option
            ") to have interest on all or a portion of the Advances be charged
            at the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on
            the earliest of (i) the last day of the Interest Period applicable
            thereto, (ii) the occurrence of an Event of Default in consequence
            of which Lender has elected to accelerate the maturity of all or any
            portion of the Obligations, or (iii) termination of this Agreement
            pursuant to the terms hereof. On the last day of each applicable
            Interest Period, unless otherwise notified by Administrative
            Borrower, the interest rate applicable to a LIBOR Rate Loan shall
            automatically continue at the rate of interest then applicable to
            LIBOR Rate Loans with an Interest Period of equal duration to the
            Interest Period then ending. At any time that an Event of Default
            has occurred and is continuing, Borrowers no longer shall have the
            option to request that Advances bear interest at the LIBOR Rate and
            Lender shall have the right to convert the interest rate on all
            outstanding LIBOR Rate Loans to the rate then applicable to Base
            Rate Loans hereunder.
            LIBOR Election
            .
             i.   Administrative Borrower may, at any time and from time to
                  time, so long as no Event of Default has occurred and is
                  continuing, elect to exercise the LIBOR Option by notifying
                  Lender prior to 2:00 p.m. (Atlanta time) at least 3 Business
                  Days prior to the commencement of the proposed Interest Period
                  (the "LIBOR Deadline"). Notice of Administrative Borrower's
                  election of the LIBOR Option for a permitted portion of the
                  Advances and an Interest Period pursuant to this Section shall
                  be made by delivery to Lender of a LIBOR Notice received by
                  Lender before the LIBOR Deadline, or by telephonic notice
                  received by Lender before the LIBOR Deadline (to be confirmed
                  by delivery to Lender of a LIBOR Notice received by Lender
                  prior to 5:00 p.m. (Atlanta time) on the same day.
             ii.  Each LIBOR Notice shall be irrevocable and binding on
                  Borrowers. In connection with each LIBOR Rate Loan, each
                  Borrower shall indemnify, defend, and hold Lender harmless
                  against any loss, cost, or expense incurred by Lender as a
                  result of (a) the payment of any principal of any LIBOR Rate
                  Loan other than on the last day of an Interest Period
                  applicable thereto (including as a result of an Event of
                  Default), (b) the conversion of any LIBOR Rate Loan other than
                  on the last day of the Interest Period applicable thereto, or
                  (c) the failure to borrow, convert, continue or prepay any
                  LIBOR Rate Loan on the date specified in any LIBOR Notice
                  delivered pursuant hereto (such losses, costs, and expenses,
                  collectively, "Funding Losses"). Funding Losses shall, with
                  respect to Lender, be deemed to equal the amount determined by
                  Lender to be the excess, if any, of (i) the amount of interest
                  that would have accrued on the principal amount of such LIBOR
                  Rate Loan had such event not occurred, at the LIBOR Rate that
                  would have been applicable thereto, for the period from the
                  date of such event to the last day of the then current
                  Interest Period therefor (or, in the case of a failure to
                  borrow, convert or continue, for the period that would have
                  been the Interest Period therefor), minus (ii) the amount of
                  interest that would accrue on such principal amount for such
                  period at the interest rate which Lender would be offered were
                  it to be offered, at the commencement of such period, Dollar
                  deposits of a comparable amount and period in the London
                  interbank market. A certificate of Lender delivered to
                  Administrative Borrower setting forth any amount or amounts
                  that Lender is entitled to receive pursuant to this Section
                  shall be conclusive absent manifest error.
             iii. Borrowers shall have not more than 5 LIBOR Rate Loans in
                  effect at any given time. Borrowers only may exercise the
                  LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
                  integral multiples of $500,000 in excess thereof.
        
            Prepayments
            . Borrowers may prepay LIBOR Rate Loans at any time;
            provided
            ,
            however
            , that in the event that LIBOR Rate Loans are prepaid on any date
            that is not the last day of the Interest Period applicable thereto,
            including as a result of any automatic prepayment through the
            required application by Lender of proceeds of Collections in
            accordance with
            Section 2.4(b)
            or for any other reason, including early termination of the term of
            this Agreement or acceleration of all or any portion of the
            Obligations pursuant to the terms hereof, each Borrower shall
            indemnify, defend, and hold Lender and their Participants harmless
            against any and all Funding Losses in accordance with clause (b)
            above.
            Special Provisions Applicable to LIBOR Rate.
         a. The LIBOR Rate may be adjusted by Lender on a prospective basis to
            take into account any additional or increased costs to Lender of
            maintaining or obtaining any eurodollar deposits or increased costs
            due to changes in applicable law occurring subsequent to the
            commencement of the then applicable Interest Period, including
            changes in tax laws (except changes of general applicability in
            corporate income tax laws) and changes in the reserve requirements
            imposed by the Board of Governors of the Federal Reserve System (or
            any successor), excluding the Reserve Percentage, which additional
            or increased costs would increase the cost of funding loans bearing
            interest at the LIBOR Rate. In any such event, Lender shall give
            Administrative Borrower notice of such a determination and
            adjustment and, upon its receipt of the notice from Lender,
            Administrative Borrower may, by notice to Lender (y) require Lender
            to furnish to Administrative Borrower a statement setting forth the
            basis for adjusting such LIBOR Rate and the method for determining
            the amount of such adjustment, or (z) repay the LIBOR Rate Loans
            with respect to which such adjustment is made (together with any
            amounts due under clause (b)(ii) above).
         b. In the event that any change in market conditions or any law,
            regulation, treaty, or directive, or any change therein or in the
            interpretation of application thereof, shall at any time after the
            date hereof, in the reasonable opinion of Lender, make it unlawful
            or impractical for Lender to fund or maintain LIBOR Advances or to
            continue such funding or maintaining, or to determine or charge
            interest rates at the LIBOR Rate, Lender shall give notice of such
            changed circumstances to Administrative Borrower and (y) in the case
            of any LIBOR Rate Loans that are outstanding, the date specified in
            Lender's notice shall be deemed to be the last day of the Interest
            Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate
            Loans of Lender thereafter shall accrue interest at the rate then
            applicable to Base Rate Loans, and (z) Borrowers shall not be
            entitled to elect the LIBOR Option until Lender determines that it
            would no longer be unlawful or impractical to do so.
    
        No Requirement of Matched Funding
        . Anything to the contrary contained herein notwithstanding, neither
        Lender, nor any of its Participants, is required actually to acquire
        eurodollar deposits to fund or otherwise match fund any Obligation as to
        which interest accrues at the LIBOR Rate. The provisions of this Section
        shall apply as if Lender or its Participants had match funded any
        Obligation as to which interest is accruing at the LIBOR Rate by
        acquiring eurodollar deposits for each Interest Period in the amount of
        the LIBOR Rate Loans.

 1. Capital Requirements. If, after the date hereof, Lender determines that (i)
    the adoption of or change in any law, rule, regulation or guideline
    regarding capital requirements for banks or bank holding companies, or any
    change in the interpretation or application thereof by any Governmental
    Authority charged with the administration thereof, or (ii) compliance by
    Lender or its parent bank holding company with any guideline, request or
    directive of any such entity regarding capital adequacy (whether or not
    having the force of law), the effect of reducing the return on Lender's or
    such holding company's capital as a consequence of Lender's obligations
    hereunder to a level below that which Lender or such holding company could
    have achieved but for such adoption, change, or compliance (taking into
    consideration Lender's or such holding company's then existing policies with
    respect to capital adequacy and assuming the full utilization of such
    entity's capital) by any amount deemed by Lender to be material, then Lender
    may notify Administrative Borrower thereof. Following receipt of such
    notice, Borrowers agree to pay Lender on demand the amount of such reduction
    of return of capital as and when such reduction is determined, payable
    within 90 days after presentation by Lender of a statement in the amount and
    setting forth in reasonable detail Lender's calculation thereof and the
    assumptions upon which such calculation was based (which statement shall be
    deemed true and correct absent manifest error). In determining such amount,
    Lender may use any reasonable averaging and attribution methods.
 2. Joint and Several Liability of Borrowers.
     a. Each Borrower is accepting joint and several liability hereunder and
        under the other Loan Documents in consideration of the financial
        accommodations to be provided by the Lender under this Agreement, for
        the mutual benefit, directly and indirectly, of each Borrower and in
        consideration of the undertakings of the other Borrowers to accept joint
        and several liability for the Obligations.
     b. Each Borrower, jointly and severally, hereby irrevocably and
        unconditionally accepts, not merely as a surety but also as a co-debtor,
        joint and several liability with the other Borrowers, with respect to
        the payment and performance of all of the Obligations (including,
        without limitation, any Obligations arising under this Section 2.15), it
        being the intention of the parties hereto that all the Obligations shall
        be the joint and several obligations of each Person composing Borrowers
        without preferences or distinction among them.
     c. If and to the extent that any Borrower shall fail to make any payment
        with respect to any of the Obligations as and when due or to perform any
        of the Obligations in accordance with the terms thereof, then in each
        such event the other Persons composing Borrowers will make such payment
        with respect to, or perform, such Obligation.
     d. The Obligations of each Person composing Borrowers under the provisions
        of this Section 2.15 constitute the absolute and unconditional, full
        recourse Obligations of each Person composing Borrowers enforceable
        against each such Borrower to the full extent of its properties and
        assets, irrespective of the validity, regularity or enforceability of
        this Agreement or any other circumstances whatsoever.
     e. Except as otherwise expressly provided in this Agreement, each Person
        composing Borrowers hereby waives notice of acceptance of its joint and
        several liability, notice of any Advances or Letters of Credit issued
        under or pursuant to this Agreement, notice of the occurrence of any
        Default, Event of Default, or of any demand for any payment under this
        Agreement, notice of any action at any time taken or omitted by Lender
        under or in respect of any of the Obligations, any requirement of
        diligence or to mitigate damages and, generally, to the extent permitted
        by applicable law, all demands, notices and other formalities of every
        kind in connection with this Agreement (except as otherwise provided in
        this Agreement). Each Person composing Borrowers hereby assents to, and
        waives notice of, any extension or postponement of the time for the
        payment of any of the Obligations, the acceptance of any payment of any
        of the Obligations, the acceptance of any partial payment thereon, any
        waiver, consent or other action or acquiescence by Lender at any time or
        times in respect of any default by any Person composing Borrowers in the
        performance or satisfaction of any term, covenant, condition or
        provision of this Agreement, any and all other indulgences whatsoever by
        Lender in respect of any of the Obligations, and the taking, addition,
        substitution or release, in whole or in part, at any time or times, of
        any security for any of the Obligations or the addition, substitution or
        release, in whole or in part, of any Person composing Borrowers. Without
        limiting the generality of the foregoing, each Borrower assents to any
        other action or delay in acting or failure to act on the part of Lender
        with respect to the failure by any Person composing Borrowers to comply
        with any of its respective Obligations, including, without limitation,
        any failure strictly or diligently to assert any right or to pursue any
        remedy or to comply fully with applicable laws or regulations
        thereunder, which might, but for the provisions of this Section 2.15,
        afford grounds for terminating, discharging or relieving any Person
        composing Borrowers, in whole or in part, from any of its Obligations
        under this Section 2.15, it being the intention of each Person composing
        Borrowers that, so long as any of the Obligations hereunder remain
        unsatisfied, the Obligations of such Person composing Borrowers under
        this Section 2.15 shall not be discharged except by performance and then
        only to the extent of such performance. The Obligations of each Person
        composing Borrowers under this Section 2.15 shall not be diminished or
        rendered unenforceable by any winding up, reorganization, arrangement,
        liquidation, reconstruction or similar proceeding with respect to any
        Person composing Borrowers or Lender. The joint and several liability of
        the Persons composing Borrowers hereunder shall continue in full force
        and effect notwithstanding any absorption, merger, amalgamation or any
        other change whatsoever in the name, constitution or place of formation
        of any of the Persons composing Borrowers or Lender.
     f. Each Person composing Borrowers represents and warrants to Lender that
        such Borrower is currently informed of the financial condition of
        Borrowers and of all other circumstances which a diligent inquiry would
        reveal and which bear upon the risk of nonpayment of the Obligations.
        Each Person composing Borrowers further represents and warrants to
        Lender that such Borrower has read and understands the terms and
        conditions of the Loan Documents. Each Person composing Borrowers hereby
        covenants that such Borrower will continue to keep informed of
        Borrowers' financial condition, the financial condition of other
        guarantors, if any, and of all other circumstances which bear upon the
        risk of nonpayment or nonperformance of the Obligations.
     g. The provisions of this Section 2.15 are made for the benefit of Lender
        and its respective successors and assigns, and may be enforced by it or
        them from time to time against any or all of the Persons composing
        Borrowers as often as occasion therefor may arise and without
        requirement on the part of Lender, successor, or assign first to marshal
        any of its or their claims or to exercise any of its or their rights
        against any of the other Persons composing Borrowers or to exhaust any
        remedies available to it or them against any of the other Persons
        composing Borrowers or to resort to any other source or means of
        obtaining payment of any of the Obligations hereunder or to elect any
        other remedy. The provisions of this Section 2.15 shall remain in effect
        until all of the Obligations shall have been paid in full or otherwise
        fully satisfied. If at any time, any payment, or any part thereof, made
        in respect of any of the Obligations is rescinded or must otherwise be
        restored or returned by Lender upon the insolvency, bankruptcy or
        reorganization of any of the Persons composing Borrowers, or otherwise,
        the provisions of this Section 2.15 will forthwith be reinstated in
        effect, as though such payment had not been made.
     h. Each of the Persons composing Borrowers hereby agrees that it will not
        enforce any of its rights of contribution or subrogation against the
        other Persons composing Borrowers with respect to any liability incurred
        by it hereunder or under any of the other Loan Documents, any payments
        made by it to Lender with respect to any of the Obligations or any
        collateral security therefor until such time as all of the Obligations
        have been paid in full in cash. Any claim which any Borrower may have
        against any other Borrower with respect to any payments to Lender
        hereunder or under any other Loan Documents are hereby expressly made
        subordinate and junior in right of payment, without limitation as to any
        increases in the Obligations arising hereunder or thereunder, to the
        prior payment in full in cash of the Obligations and, in the event of
        any insolvency, bankruptcy, receivership, liquidation, reorganization or
        other similar proceeding under the laws of any jurisdiction relating to
        any Borrower, its debts or its assets, whether voluntary or involuntary,
        all such Obligations shall be paid in full in cash before any payment or
        distribution of any character, whether in cash, securities or other
        property, shall be made to any other Borrower therefor.
     i. Each of the Persons composing Borrowers hereby agrees that, after the
        occurrence and during the continuance of any Default or Event of
        Default, the payment of any amounts due with respect to the indebtedness
        owing by any Borrower to any other Borrower is hereby subordinated to
        the prior payment in full in cash of the Obligations. Each Borrower
        hereby agrees that after the occurrence and during the continuance of
        any Default or Event of Default, such Borrower will not demand, sue for
        or otherwise attempt to collect any indebtedness of any other Borrower
        owing to such Borrower until the Obligations shall have been paid in
        full in cash. If, notwithstanding the foregoing sentence, such Borrower
        shall collect, enforce or receive any amounts in respect of such
        indebtedness, such amounts shall be collected, enforced and received by
        such Borrower as trustee for the Lender, and such Borrower shall deliver
        any such amounts to Lender for application to the Obligations in
        accordance with Section 2.4(b).

 1. CONDITIONS; TERM OF AGREEMENT.
     1. Conditions Precedent to the Initial Extension of Credit. The obligation
        of Lender to make the initial Advance (or otherwise to extend any credit
        provided for hereunder), is subject to the fulfillment, to the
        satisfaction of Lender, of each of the conditions precedent set forth
        below:
         a. the Closing Date shall occur on or before July 31, 2002;
         b. Lender shall have received all financing statements required by
            Lender, duly executed by the applicable Borrowers, and Lender shall
            have received searches reflecting the filing of all such financing
            statements;
         c. Lender shall have received each of the following documents, the form
            and substance of which are satisfactory to Lender, duly executed,
            and each such document shall be in full force and effect:

 i.    Assignment of Life Insurance Policies,
 ii.   the Cash Management Agreements,
 iii.  the Control Agreements,
 iv.   the Disbursement Letter,
 v.    the Due Diligence Letter,
 vi.   the Fee Letter,
 vii.  the Guaranty,
 viii. the Guarantor Security Agreement,
 ix.   the Intercompany Subordination Agreement,
 x.    the Trademark Security Agreement,
 xi.   the Officers' Certificate,
 xii.  the Pay-Off Letter, together with termination statements under the Code
       and other documentation evidencing the termination by Existing Lender of
       its Liens in and to the properties and assets of Borrowers,
 xiii. the Pledge Agreement, together with all certificates representing the
       shares of Stock pledged thereunder, as well as Stock powers with respect
       thereto endorsed in blank,
 xiv.  a Borrowing Base Certificate dated as of the Closing Date, and
 xv.   a Compliance Certificate dated as of the Closing Date;

 a. Lender shall have received a certificate from the secretary of each Borrower
    attesting to the resolutions of such Borrower's Board of Directors
    authorizing its execution, delivery, and performance of this Agreement and
    the other Loan Documents to which such Borrower is a party and authorizing
    specific officers of such Borrower to execute the same;
 b. Lender shall have received copies of each Borrower's Governing Documents, as
    amended, modified, or supplemented to the Closing Date, certified by the
    secretary of such Borrower;
 c. Lender shall have received a certificate of status with respect to each
    Borrower, dated on or after July 1, 2002, such certificate to be issued by
    the appropriate officer of the jurisdiction of organization of such
    Borrower, which certificate shall indicate that such Borrower is in good
    standing in such jurisdiction;
 d. Lender shall have received certificates of status with respect to each
    Borrower, each dated within 30 days of the Closing Date, such certificates
    to be issued by the appropriate officer of the jurisdictions (other than the
    jurisdiction of organization of such Borrower) in which its failure to be
    duly qualified or licensed would constitute a Material Adverse Change, which
    certificates shall indicate that such Borrower is in good standing in such
    jurisdictions;
 e. Lender shall have received a certificate from the secretary of each
    Guarantor attesting to the resolutions of such Guarantor's board of
    directors authorizing its execution, delivery, and performance of the Loan
    Documents to which such Guarantor is a party and authorizing specific
    officers of such Guarantor to execute the same;
 f. Lender shall have received copies of each Guarantor's Governing Documents,
    as amended, modified, or supplemented to the Closing Date, certified by the
    secretary of such Guarantor;
 g. Lender shall have received a certificate of status with respect to each
    Guarantor, dated on or after July 1, 2002, such certificate to be issued by
    the appropriate officer of the jurisdiction of organization of such
    Guarantor, which certificate shall indicate that such Guarantor is in good
    standing in such jurisdiction;
 h. Lender shall have received certificates of status with respect to each
    Guarantor, each dated within 30 days of the Closing Date, such certificates
    to be issued by the appropriate officer of the jurisdictions (other than the
    jurisdiction of organization of such Guarantor) in which its failure to be
    duly qualified or licensed would constitute a Material Adverse Change, which
    certificates shall indicate that such Guarantor is in good standing in such
    jurisdictions;
 i. Lender shall have received a certificate of insurance, together with the
    endorsements thereto, as are required by Section 6.8, the form and substance
    of which are satisfactory to Lender;
 j. Lender shall have received Collateral Access Agreements with respect to the
    following locations: (i) Borrowers' leased facility in Dalton, Georgia and
    (ii) the facility operated by Springs Industries, Inc. in Lancaster, South
    Carolina, together with any consignment financing statement required by
    Lender with respect to such facility;
 k. Lender shall have received opinions of Borrowers' counsel, the form and
    substance of which are satisfactory to Lender;
 l. Lender shall have received satisfactory evidence (including a certificate of
    the chief financial officer of Parent) that all tax returns required to be
    filed by Borrowers have been timely filed and all taxes upon Borrowers or
    their properties, assets, income, and franchises (including Real Property
    taxes, excise taxes and payroll taxes) have been paid prior to delinquency,
    except such taxes that are the subject of a Permitted Protest;
 m. Borrowers shall have the Required Availability after giving effect to the
    initial extensions of credit hereunder;
 n. Lender shall have completed its business, legal, and collateral due
    diligence, including (i) a collateral audit and review of Borrowers' books
    and records and verification of Borrowers' vendors, Equipment and
    representations and warranties to Lender, the results of which shall be
    satisfactory to Lender, (ii) an inspection of each of the locations where
    Inventory is located, the results of which shall be satisfactory to Lender
    and (iii) a review of Borrowers' material contracts;
 o. Lender shall have received completed reference checks with respect to
    Borrowers' senior management, the results of which are satisfactory to
    Lender in its sole discretion;
 p. Lender shall have received an appraisal of the Liquidation Percentage
    applicable to Borrowers' Inventory and an appraisal of Borrowers' Equipment,
    the results of which shall be satisfactory to Lender;
 q. Lender shall have received Borrowers' Closing Date Business Plan;
 r. Borrowers shall pay all Lender Expenses incurred in connection with the
    transactions evidenced by this Agreement;
 s. Lender shall have received a phase-I or phase-II environmental report with
    respect to each parcel of Real Property owned by any Borrower for which such
    environmental reports have been prepared; the environmental consultants
    retained for such reports, the scope of the reports, and remediation costs
    and procedures, if any, and the results thereof shall be acceptable to
    Lender and its counsel;
 t. Lender shall have received copies of each of Borrowers' Material Contracts,
    together with a certificate of the secretary of the applicable Borrower
    certifying each such document as being a true, correct, and complete copy
    thereof;
 u. Borrowers shall have received all licenses, approvals or evidence of other
    actions required by any Governmental Authority in connection with the
    execution and delivery by Borrowers of this Agreement or any other Loan
    Document or with the consummation of the transactions contemplated hereby
    and thereby;
 v. Lender shall have received satisfactory evidence that (i) Borrowers' have
    prepaid the premiums owed through the Maturity Date for each of the Life
    Insurance Policies, and (ii) that Lender has been named as the loss payee
    for each such policy;
 w. Lender shall have received satisfactory evidence that Parent has submitted
    the appropriate documentation to the relevant Governmental Authority to
    dissolve Synco International, Inc.; and
 x. all other documents and legal matters in connection with the transactions
    contemplated by this Agreement shall have been delivered, executed, or
    recorded and shall be in form and substance satisfactory to Lender.

 1. Conditions Subsequent to the Initial Extension of Credit. The obligation of
    Lender to continue to make Advances (or otherwise extend credit hereunder)
    is subject to the fulfillment, on or before the date applicable thereto, of
    each of the conditions subsequent set forth below (the failure by Borrowers
    to so perform or cause to be performed constituting an Event of Default):
     a. within 30 days of the Closing Date, deliver to Lender certified copies
        of the policies of insurance, together with the endorsements thereto, as
        are required by Section 6.8, the form and substance of which are
        satisfactory to Lender and its counsel;
     b. within 30 days of the Closing Date, deliver to Lender evidence
        satisfactory to Lender that the public record in Sullivan County,
        Tennessee reflects that the $9,168.60 judgment in favor of Joseph P.
        Harrison has been satisfied or otherwise removed from the public record;
     c. within 30 days of the Closing Date, deliver to Lender an amendment to
        that certain Uniform Commercial Code financing statement number
        020304-1203131 filed by Barloworld Fleet Leasing LLC with the Secretary
        of State of South Carolina, the form and substance of which are
        satisfactory to Lender and its counsel;
     d. within 60 days of the Closing Date, deliver to Lender financial reports
        evidencing the write-off of all non-collectible accounts of Organic
        Pigments Corporation, the form and substance of which are satisfactory
        to Lender;
     e. within 90 days of the Closing Date, deliver to Lender evidence
        satisfactory to Lender that Parent has dissolved Synco International,
        Inc.;
     f. within 30 days of the Closing Date, deliver to Lender an executed Cash
        Management Agreement for the Deposit Account of Metchem, Inc. account
        number 2000900270420 with First Union National Bank, in form and
        substance satisfactory to Lender; and
     g. within 10 days of the Closing Date, deliver to Lender articles or
        certificates of incorporation or other organizational documents for each
        Borrower (excluding Parent) and each Guarantor certified by the
        appropriate officer of the jurisdiction or organization for such
        Borrower or Guarantor;
     h. within 10 days of the Closing Date, deliver to Lender the original of
        each of the following: (i) that certain Note dated as of March 12, 1996,
        in the amount of $60,000,000, executed by Parent in connection with that
        certain Loan Agreement between Parent and Metchem, Inc. of even date
        therewith; (ii) that certain Note dated as of March 12, 1996, in the
        amount of $30,000,000, executed by Bristol Metals, L.P., as the
        successor-in-interest to Bristol Metals, Inc., in connection with that
        certain Loan Agreement between Metchem and Bristol Metals, L.P., as the
        successor-in-interest to Bristol Metals, Inc. of even date therewith;
        (iii) that certain Note dated as of August 21, 1998, in the amount of
        $10,000,000 executed by Organic-Pigments Corp. in connection with that
        certain Loan Agreement between Organic-Pigments Corp. and Metchem, Inc.
        dated as of July 1, 1998; and (iv) that certain Note dated as of August
        9, 1999 in the amount of $10,000,000 executed by Manufacturers
        Chemicals, L.P. in connection with that certain Loan Agreement between
        Manufacturers Chemicals, L.P. and Metchem, Inc. of even date therewith,
        each appropriate endorsed and with a caption referencing the
        Intercompany Subordination Agreement affixed thereto;
     i. on or before the close of business on July 31, 2002, deliver to Lender a
        certificate of insurance, together with the endorsements thereto, as are
        required by Section 6.8, the form and substance of which are
        satisfactory to Lender; and
     j. within 10 days of the Closing Date, deliver to Lender a replacement
        stock certificate representing the Stock of Whiting Metals, Inc. owned
        by Parent and pledged to Lender pursuant to the Pledge Agreement,
        together with an accompanying Stock power.

 2. Conditions Precedent to all Extensions of Credit. The obligation of Lender
    to make all Advances (or to extend any other credit hereunder) shall be
    subject to the following conditions precedent:
     a. the representations and warranties contained in this Agreement and the
        other Loan Documents shall be true and correct in all material respects
        on and as of the date of such extension of credit, as though made on and
        as of such date (except to the extent that such representations and
        warranties relate solely to an earlier date);
     b. no Default or Event of Default shall have occurred and be continuing on
        the date of such extension of credit, nor shall either result from the
        making thereof;
     c. no injunction, writ, restraining order, or other order of any nature
        prohibiting, directly or indirectly, the extending of such credit shall
        have been issued and remain in force by any Governmental Authority
        against any Borrower, Lender, or any of their Affiliates; and
     d. no Material Adverse Change shall have occurred.

 3. Term. This Agreement shall become effective upon the execution and delivery
    hereof by Borrowers and Lender and shall continue in full force and effect
    for a term ending on the date that is the second anniversary of the Closing
    Date (the "Maturity Date"). The foregoing notwithstanding, Lender, shall
    have the right to terminate its obligations under this Agreement immediately
    and without notice upon the occurrence and during the continuation of an
    Event of Default.
 4. Effect of Termination. On the date of termination of this Agreement, all
    Obligations (including contingent reimbursement obligations of Borrowers
    with respect to any outstanding Letters of Credit and including all Bank
    Product Obligations) immediately shall become due and payable without notice
    or demand (including (a) either (i) providing cash collateral to be held by
    Lender for the benefit of those Lenders with a Revolver Commitment in an
    amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
    causing the original Letters of Credit to be returned to the Issuing Lender,
    and (b) providing cash collateral to be held by Lender for the benefit of
    Wells Fargo or its Affiliates with respect to the then extant Bank Product
    Obligations). No termination of this Agreement, however, shall relieve or
    discharge Borrowers of their duties, Obligations, or covenants hereunder and
    the Lender's Liens in the Collateral shall remain in effect until all
    Obligations have been fully and finally discharged and Lender's obligations
    to provide additional credit hereunder have been terminated. When this
    Agreement has been terminated and all of the Obligations have been fully and
    finally discharged and Lender's obligations to provide additional credit
    under the Loan Documents have been terminated irrevocably, Lender will, at
    Borrowers' sole expense, execute and deliver any termination statements to
    be filed pursuant to the Code, lien releases, mortgage releases,
    re-assignments of intellectual property, discharges of security interests,
    pay-off letters and other similar discharge or release documents (and, if
    applicable, in recordable form) as are reasonably necessary to release, as
    of record, the Lender's Liens and all notices of security interests and
    liens previously filed by Lender with respect to the Obligations.
 5. Early Termination by Borrowers. Borrowers have the option, at any time upon
    90 days' prior written notice by Administrative Borrower to Lender, to
    terminate this Agreement by paying to Lender, in cash, the Obligations
    (including (a) either (i) providing cash collateral to be held by Lender in
    an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
    causing the original Letters of Credit to be returned to Lender, and (b)
    providing cash collateral to be held by Lender for the benefit of Wells
    Fargo or its Affiliates with respect to the then extant Bank Product
    Obligations), in full, together with the Applicable Prepayment Premium. If
    Administrative Borrower has sent a notice of termination pursuant to the
    provisions of this Section, then Lender's obligations to extend credit
    hereunder shall terminate and Borrowers shall be obligated to repay the
    Obligations (including (a) either (i) providing cash collateral to be held
    by Lender in an amount equal to 105% of the then extant Letter of Credit
    Usage, or (ii) causing the original Letters of Credit to be returned to
    Lender, and (b) providing cash collateral to be held by Lender for the
    benefit of Wells Fargo or its Affiliates with respect to the then extant
    Bank Product Obligations), in full, together with the Applicable Prepayment
    Premium, on the date set forth as the date of termination of this Agreement
    in such notice. In the event of the termination of this Agreement and
    repayment of the Obligations at any time prior to the Maturity Date, for any
    other reason, including (i) termination upon the election of Lender to
    terminate after the occurrence of an Event of Default, (ii) foreclosure and
    sale of Collateral, (iii) sale of the Collateral in any Insolvency
    Proceeding, or (iv) restructure, reorganization or compromise of the
    Obligations by the confirmation of a plan of reorganization, or any other
    plan of compromise, restructure, or arrangement in any Insolvency
    Proceeding, then, in view of the impracticability and extreme difficulty of
    ascertaining the actual amount of damages to Lender or profits lost by
    Lender as a result of such early termination, and by mutual agreement of the
    parties as to a reasonable estimation and calculation of the lost profits or
    damages of Lender, Borrowers shall pay the Applicable Prepayment Premium to
    Lender, measured as of the date of such termination.

 1. CREATION OF SECURITY INTEREST.
     1. Grant of Security Interest. Each Borrower hereby grants to Lender a
        continuing security interest in all of its right, title, and interest in
        all currently existing and hereafter acquired or arising Personal
        Property Collateral in order to secure prompt repayment of any and all
        of the Obligations in accordance with the terms and conditions of the
        Loan Documents and in order to secure prompt performance by Borrowers of
        each of their covenants and duties under the Loan Documents. The
        Lender's Liens in and to the Personal Property Collateral shall attach
        to all Personal Property Collateral without further act on the part of
        Lender or Borrowers. Anything contained in this Agreement or any other
        Loan Document to the contrary notwithstanding, except for Permitted
        Dispositions, Borrowers have no authority, express or implied, to
        dispose of any item or portion of the Collateral.
     2. Negotiable Collateral and Chattel Paper. Borrowers covenant and agree
        with Lender that from and after the date of this Agreement and until the
        date of termination of this Agreement in accordance with Section 3.5
        hereof:
         a. In the event that any Collateral, including proceeds, is evidenced
            by or consists of Negotiable Collateral, and if and to the extent
            that perfection or priority of Lender's security interest is
            dependent on or enhanced by possession, Borrowers, immediately upon
            the request of Lender, shall endorse and deliver physical possession
            of such Negotiable Collateral or Chattel Paper to Lender.
         b. Borrowers shall take all steps reasonably necessary to grant Lender
            control of all electronic Chattel Paper in accordance with the Code
            and all "transferable records" as defined in each of the Uniform
            Electronic Transaction Act and the Electronic Signatures in Global
            and National Commerce Act; and
         c. If Borrowers retain possession of any Chattel Paper or instruments
            with Lender's consent, such Chattel Paper and instruments shall be
            marked with the following legend: "This writing and the obligations
            evidenced or secured thereby are subject to the security interest of
            Foothill Capital Corporation."
    
     3. Collection of Accounts, General Intangibles, and Negotiable Collateral.
        At any time after the occurrence and during the continuation of an Event
        of Default, Lender or Lender's designee may (a) notify Account Debtors
        of Borrowers that the Accounts, Chattel Paper, or General Intangibles
        have been assigned to Lender or that Lender has a security interest
        therein, or (b) collect the Accounts, Chattel Paper, or General
        Intangibles directly and charge the collection costs and expenses to the
        Loan Account. Each Borrower agrees that it will hold in trust for
        Lender, as Lender's trustee, any Collections that it receives and
        immediately will deliver said Collections to Lender or a Cash Management
        Bank in their original form as received by the applicable Borrower.
     4. Delivery of Additional Documentation Required. At any time upon the
        request of Lender, Borrowers shall execute (or cause to be executed) and
        deliver to Lender, any and all financing statements, original financing
        statements in lieu of continuation statements, fixture filings, security
        agreements, pledges, assignments, endorsements of certificates of title,
        and all other documents (the "Additional Documents") upon which
        Borrowers' signatures may be required that Lender may request in its
        Permitted Discretion, in form and substance satisfactory to Lender, to
        perfect and continue the perfection of or better perfect the Lender's
        Liens in the Collateral (whether now owned or hereafter arising or
        acquired), and in order to consummate fully all of the transactions
        contemplated hereby and under the other Loan Documents. To the maximum
        extent permitted by applicable law, each Borrower authorizes Lender to
        execute any such Additional Documents in the applicable Borrower's name
        and authorize Lender to file such executed Additional Documents in any
        appropriate filing office. In addition, on such periodic basis as Lender
        shall require, Borrowers shall (a) provide Lender with a report of all
        new patentable, copyrightable, or trademarkable materials acquired or
        generated by Borrowers during the prior period, (b) cause all patents,
        copyrights, and trademarks acquired or generated by Borrowers that are
        not already the subject of a registration with the appropriate filing
        office (or an application therefor diligently prosecuted) to be
        registered with such appropriate filing office in a manner sufficient to
        impart constructive notice of Borrowers' ownership thereof, and (c)
        cause to be prepared, executed, and delivered to Lender supplemental
        schedules to the applicable Loan Documents to identify such patents,
        copyrights, and trademarks as being subject to the security interests
        created thereunder. Borrowers authorize Lender to transmit, communicate
        or, as applicable, file any financing statement under the Code, record,
        in-lieu financing statement, amendment, correction statement,
        continuation statement, termination statement or other instrument
        describing the Collateral as "all personal property of Debtor" or "all
        assets of Debtor" or words of similar effect in such jurisdictions and
        in such filing offices as Lender may deem necessary or desirable in
        order to perfect any security interest granted by Borrowers under this
        Agreement and the other Loan Documents without signature. Borrowers
        hereby ratify, to the extent necessary, Lender's authorization to file a
        financing statement, if such financing statement has been pre-filed by
        Lender prior to the Closing Date. Prior to repayment in full and final
        discharge of the Obligations, including Borrowers' delivery of cash
        collateral in an amount equal to 105% of the aggregate face value of the
        then extant Letter of Credit Usage to be held by Lender for the benefit
        of any Underlying Issuer with respect to the then extant Letter of
        Credit Usage or return of the original Letters of Credit to the Issuing
        Lender, Borrowers shall not terminate, amend or file a correction
        statement with respect to any financing statement filed pursuant to this
        Section 4.4 without Lender's prior written consent.
     5. Power of Attorney. Each Borrower hereby irrevocably makes, constitutes,
        and appoints Lender (and any of Lender's officers, employees, or Lenders
        designated by Lender) as such Borrower's true and lawful attorney, with
        power to (a) if such Borrower refuses to, or fails timely to execute and
        deliver any of the documents described in Section 4.4, sign the name of
        such Borrower on any of the documents described in Section 4.4, (b) at
        any time that an Event of Default has occurred and is continuing, sign
        such Borrower's name on any invoice or bill of lading relating to the
        Collateral, drafts against Account Debtors, or notices to Account
        Debtors, (c) send requests for verification of Accounts, (d) endorse
        such Borrower's name on any Collection item that may come into Lender's
        possession, (e) at any time that an Event of Default has occurred and is
        continuing, make, settle, and adjust all claims under such Borrower's
        policies of insurance and make all determinations and decisions with
        respect to such policies of insurance, and (f) at any time that an Event
        of Default has occurred and is continuing, settle and adjust disputes
        and claims respecting the Accounts, Chattel Paper, or General
        Intangibles directly with Account Debtors, for amounts and upon terms
        that Lender determines to be reasonable, and Lender may cause to be
        executed and delivered any documents and releases that Lender determines
        to be necessary. The appointment of Lender as each Borrower's attorney,
        and each and every one of its rights and powers, being coupled with an
        interest, is irrevocable until all of the Obligations have been fully
        and finally repaid and performed and Lender's obligations to extend
        credit hereunder are terminated.
     6. Right to Inspect. Lender (through any of its respective officers,
        employees, or agents) shall have the right, from time to time hereafter
        to inspect the Books and to check, test, and appraise the Collateral in
        order to verify Borrowers' financial condition or the amount, quality,
        value, condition of, or any other matter relating to, the Collateral.
     7. Control Agreements. Each Borrower agrees that it will not transfer
        assets out of any Securities Accounts other than as permitted under
        Section 7.19 and, if to another securities intermediary, unless each of
        the applicable Borrower, Lender, and the substitute securities
        intermediary have entered into a Control Agreement. No arrangement
        contemplated hereby or by any Control Agreement in respect of any
        Securities Accounts or other Investment Property shall be modified by
        Borrowers without the prior written consent of Lender. Upon the
        occurrence and during the continuance of a Default or Event of Default,
        Lender may notify any securities intermediary to liquidate the
        applicable Securities Account or any related Investment Property
        maintained or held thereby and remit the proceeds thereof to the
        Lender's Account.
     8. Commercial Tort Claims. Borrowers shall promptly notify Lender in
        writing upon incurring or otherwise obtaining a commercial tort claim,
        as that term is defined in the Code, after the date hereof against any
        third party and, upon request of Lender, promptly amend Schedule C-2 to
        this Agreement, authorize the filing of additional or amendments to
        existing financing statements and do such other acts or things deemed
        necessary or desirable by Lender to give Lender a security interest in
        any such commercial tort claim.

 2. REPRESENTATIONS AND WARRANTIES.

    In order to induce Lender to enter into this Agreement, each Borrower makes
    the following representations and warranties to Lender, which
    representations and warranties shall be true, correct, and complete, in all
    material respects, as of the date hereof, and shall be true, correct, and
    complete, in all material respects, as of the Closing Date, and at and as of
    the date of the making of each Advance (or other extension of credit) made
    thereafter, as though made on and as of the date of such Advance (or other
    extension of credit) (except to the extent that such representations and
    warranties relate solely to an earlier date) and such representations and
    warranties shall survive the execution and delivery of this Agreement:

     1.  No Encumbrances. Each Borrower has good and indefeasible title to its
         Collateral, free and clear of Liens except for Permitted Liens.
     2.  Eligible Accounts. The Eligible Accounts are bona fide existing payment
         obligations of Account Debtors created by the sale and delivery of
         Inventory or the rendition of services to such Account Debtors in the
         ordinary course of Borrowers' businesses, owed to Borrowers without
         defenses, disputes, offsets, counterclaims, or rights of return or
         cancellation. As to each Account that is identified by any Borrower as
         an Eligible Account in a Borrowing Base Certificate submitted to
         Lender, such Account is not excluded as ineligible by virtue of one or
         more of the excluding criteria set forth in the definition of Eligible
         Accounts.
     3.  Eligible Inventory. All Eligible Inventory is of good and merchantable
         quality, free from defects. As to each item of Inventory that is
         identified by any Borrower as Eligible Inventory in a Borrowing Base
         Certificate submitted to Lender, such Inventory is not excluded as
         ineligible by virtue of one or more of the excluding criteria set forth
         in the definition of Eligible Inventory.
     4.  [Intentionally omitted.]
     5.  Location of Inventory and Equipment. Except as otherwise set forth on
         Schedule 5.5 or as provided in Section 7.10, the Inventory and
         Equipment are not stored with a bailee, warehouseman, or similar party
         and are located only at the locations identified on Schedule 5.5.
     6.  Inventory and Equipment Records. Each Borrower keeps correct and
         accurate records itemizing and describing the type, quality, and
         quantity of its Inventory and Equipment and the book value thereof.
     7.  Location of Chief Executive Office; FEIN; Organization I.D. Number. The
         chief executive office of each Borrower and each Guarantor is located
         at the address indicated in Schedule 5.7 or at such address as shall
         have been disclosed to Lender in writing pursuant to Section 7.18 and
         each Borrower's FEIN and Organizational I.D. Number is identified in
         Schedule 5.7.
     8.  Due Organization and Qualification; Subsidiaries.
          a. Each Borrower is duly organized and existing and in good standing
             under the laws of the jurisdiction of its organization and
             qualified to do business in any state where the failure to be so
             qualified reasonably could be expected to have a Material Adverse
             Change.
          b. Set forth on Schedule 5.8(b), is a complete and accurate
             description of the authorized capital Stock of each Borrower, by
             class, and, as of the Closing Date, a description of the number of
             shares of each such class that are issued and outstanding. Other
             than as described on Schedule 5.8(b), there are no subscriptions,
             options, warrants, or calls relating to any shares of each
             Borrower's capital Stock, including any right of conversion or
             exchange under any outstanding security or other instrument. No
             Borrower is subject to any obligation (contingent or otherwise) to
             repurchase or otherwise acquire or retire any shares of its capital
             Stock or any security convertible into or exchangeable for any of
             its capital Stock.
          c. Set forth on Schedule 5.8(c), is a complete and accurate list of
             each Borrower's direct and indirect Subsidiaries, showing: (i) the
             jurisdiction of their organization; (ii) the number of shares of
             each class of common and preferred Stock authorized for each of
             such Subsidiaries; and (iii) the number and the percentage of the
             outstanding shares of each such class owned directly or indirectly
             by the applicable Borrower. All of the outstanding capital Stock of
             each such Subsidiary has been validly issued and is fully paid and
             non-assessable.
          d. Except as set forth on Schedule 5.8(c), there are no subscriptions,
             options, warrants, or calls relating to any shares of any
             Borrower's Subsidiaries' capital Stock, including any right of
             conversion or exchange under any outstanding security or other
             instrument. No Borrower or any of its respective Subsidiaries is
             subject to any obligation (contingent or otherwise) to repurchase
             or otherwise acquire or retire any shares of any Borrower's
             Subsidiaries' capital Stock or any security convertible into or
             exchangeable for any such capital Stock.
    
     9.  Due Authorization; No Conflict.
          a. As to each Borrower, the execution, delivery, and performance by
             such Borrower of this Agreement and the Loan Documents to which it
             is a party have been duly authorized by all necessary action on the
             part of such Borrower.
          b. As to each Borrower, the execution, delivery, and performance by
             such Borrower of this Agreement and the Loan Documents to which it
             is a party do not and will not (i) violate any provision of
             federal, state, or local law or regulation applicable to such
             Borrower, the Governing Documents of such Borrower, or any order,
             judgment, or decree of any court or other Governmental Authority
             binding on such Borrower, (ii) conflict with, result in a breach
             of, or constitute (with due notice or lapse of time or both) a
             default under any material contractual obligation of such Borrower,
             (iii) result in or require the creation or imposition of any Lien
             of any nature whatsoever upon any properties or assets of such
             Borrower, other than Permitted Liens, or (iv) require any approval
             of such Borrower's interest holders or any approval or consent of
             any Person under any material contractual obligation of such
             Borrower.
          c. Other than the filing of financing statements, fixture filings, the
             execution, delivery, and performance by each Borrower of this
             Agreement and the Loan Documents to which such Borrower is a party
             do not and will not require any registration with, consent, or
             approval of, or notice to, or other action with or by, any
             Governmental Authority or other Person.
          d. As to each Borrower, this Agreement and the other Loan Documents to
             which such Borrower is a party, and all other documents
             contemplated hereby and thereby, when executed and delivered by
             such Borrower will be the legally valid and binding obligations of
             such Borrower, enforceable against such Borrower in accordance with
             their respective terms, except as enforcement may be limited by
             equitable principles or by bankruptcy, insolvency, reorganization,
             moratorium, or similar laws relating to or limiting creditors'
             rights generally.
          e. The Lender's Liens are validly created, perfected, and first
             priority Liens, subject only to Permitted Liens.
          f. The execution, delivery, and performance by each Guarantor of the
             Loan Documents to which it is a party have been duly authorized by
             all necessary action on the part of such Guarantor.
          g. The execution, delivery, and performance by each Guarantor of the
             Loan Documents to which it is a party do not and will not (i)
             violate any provision of federal, state, or local law or regulation
             applicable to Guarantor, the Governing Documents of such Guarantor,
             or any order, judgment, or decree of any court or other
             Governmental Authority binding on such Guarantor, (ii) conflict
             with, result in a breach of, or constitute (with due notice or
             lapse of time or both) a default under any material contractual
             obligation of such Guarantor, (iii) result in or require the
             creation or imposition of any Lien of any nature whatsoever upon
             any properties or assets of such Guarantor, other than Permitted
             Liens, or (iv) require any approval of such Guarantor's interest
             holders or any approval or consent of any Person under any material
             contractual obligation of such Guarantor.
          h. The execution, delivery, and performance by each Guarantor of the
             Loan Documents to which such Guarantor is a party do not and will
             not require any registration with, consent, or approval of, or
             notice to, or other action with or by, any Governmental Authority
             or other Person.
          i. The Loan Documents to which each Guarantor is a party, and all
             other documents contemplated hereby and thereby, when executed and
             delivered by such Guarantor will be legally valid and binding
             obligations of such Guarantor, enforceable against such Guarantor
             in accordance with their respective terms, except as enforcement
             may be limited by equitable principles or by bankruptcy,
             insolvency, reorganization, moratorium, or similar laws relating to
             or limiting creditors' rights generally.
    
     10. Litigation. Other than those matters disclosed on Schedule 5.10, there
         are no actions, suits, or proceedings pending or, to the best knowledge
         of Borrowers, threatened against Borrowers, or any of their
         Subsidiaries, as applicable, except for (a) matters that are fully
         covered by insurance (subject to customary deductibles), and (b)
         matters arising after the Closing Date that, if decided adversely to
         Borrowers, or any of their Subsidiaries, as applicable, reasonably
         could not be expected to result in a Material Adverse Change.
     11. No Material Adverse Change. All financial statements relating to
         Borrowers or Guarantors that have been delivered by Borrowers to Lender
         have been prepared in accordance with GAAP (except, in the case of
         unaudited financial statements, for the lack of footnotes and being
         subject to year-end audit adjustments) and present fairly in all
         material respects, Borrowers' (or Guarantors', as applicable) financial
         condition as of the date thereof and results of operations for the
         period then ended. There has not been a Material Adverse Change with
         respect to Borrowers (or Guarantors, as applicable) since the date of
         the latest financial statements submitted to Lender on or before the
         Closing Date.
     12. Fraudulent Transfer.
          a. Each Borrower is Solvent.
          b. No transfer of property is being made by any Borrower and no
             obligation is being incurred by any Borrower in connection with the
             transactions contemplated by this Agreement or the other Loan
             Documents with the intent to hinder, delay, or defraud either
             present or future creditors of Borrowers.
    
     13. Employee Benefits. None of Borrowers, nor any of their Subsidiaries,
         nor any of their ERISA Affiliates maintains or contributes to any
         Benefit Plan, other than those listed on Schedule 5.13. Borrowers, each
         of their Subsidiaries and each of their ERISA Affiliates have satisfied
         the minimum funding standards of ERISA and the IRC with respect to each
         Benefit Plan to which it is obligated to contribute. No ERISA Event has
         occurred nor has any other event occurred that may result in an ERISA
         Event that reasonably could be expected to result in a Material Adverse
         Change. None of the Borrowers, nor any of their Subsidiaries, nor any
         of their ERISA Affiliates, or, to their knowledge, nor any fiduciary of
         any Benefit Plan is subject to any direct or indirect liability with
         respect to any Benefit Plan under any applicable law, treaty, rule,
         regulation, or agreement. None of Borrowers, nor any of their
         Subsidiaries nor any of their ERISA Affiliates is required to provide
         security to any Benefit Plan under Section 401(a)(29) of the IRC.
     14. Environmental Condition; Environmental Reports. Except as set forth on
         Schedule 5.14, (a) to Borrowers' knowledge, none of Borrowers' or any
         of their Subsidiaries' properties or assets has ever been used by
         Borrowers, any such Subsidiary or by previous owners or operators in
         the disposal of, or to produce, store, handle, treat, release, or
         transport, any Hazardous Materials, where such production, storage,
         handling, treatment, release or transport was in violation, in any
         material respect, of applicable Environmental Law, (b) to Borrowers'
         knowledge, none of Borrowers' or any of their Subsidiaries' properties
         or assets has ever been designated or identified in any manner pursuant
         to any environmental protection statute as a Hazardous Materials
         disposal site, (c) none of Borrowers or any of their Subsidiaries have
         received notice that a Lien arising under any Environmental Law has
         attached to any revenues or to any Real Property owned or operated by
         Borrowers or any such Subsidiary, and (d) none of Borrowers or any of
         their Subsidiaries have received a summons, citation, notice, or
         directive from the Environmental Protection Agency or any other federal
         or state governmental agency concerning any action or omission by any
         Borrower or any such Subsidiary resulting in the releasing or disposing
         of Hazardous Materials into the environment. Borrowers have provided
         Lender with copies of all phase-I or phase-II environmental reports in
         existence as of the Closing Date with respect to each parcel of Real
         Property owned or operated by any Borrower.
     15. Brokerage Fees. Borrowers have not utilized the services of any broker
         or finder in connection with Borrowers' obtaining financing from Lender
         under this Agreement and no brokerage commission or finders fee is
         payable by Borrowers in connection herewith.
     16. Intellectual Property. Each Borrower or one of its Subsidiaries owns,
         or holds licenses in, all trademarks, trade names, copyrights, patents,
         patent rights, and licenses that are necessary to the conduct of its
         business as currently conducted. Attached hereto as Schedule 5.16 is a
         true, correct, and complete listing of all material patents, patent
         applications, trademarks, trademark applications, copyrights, and
         copyright registrations as to which each Borrower or any such
         Subsidiary is the owner or is an exclusive licensee.
     17. Leases. Borrowers and each of their Subsidiaries enjoy peaceful and
         undisturbed possession under all leases material to the business of
         Borrowers or any such Subsidiary and to which Borrowers or any such
         Subsidiary are a party or under which Borrowers or any such Subsidiary
         are operating. All of such leases are valid and subsisting and no
         material default by Borrowers exists under any of them.
     18. DDAs. Set forth on Schedule 5.18 are all of the DDAs of each Borrower
         and each Subsidiary of such Borrower, including, with respect to each
         depository (i) the name and address of such depository, and (ii) the
         account numbers of the accounts maintained with such depository.
     19. Complete Disclosure. All factual information (taken as a whole)
         furnished by or on behalf of Borrowers or any Subsidiary of Borrowers
         in writing to Lender (including all information contained in the
         Schedules hereto or in the other Loan Documents) for purposes of or in
         connection with this Agreement, the other Loan Documents or any
         transaction contemplated herein or therein is, and all other such
         factual information (taken as a whole) hereafter furnished by or on
         behalf of Borrowers or any Subsidiary of Borrowers in writing to the
         Lender will be, true and accurate, in all material respects, on the
         date as of which such information is dated or certified and not
         incomplete by omitting to state any fact necessary to make such
         information (taken as a whole) not misleading in any material respect
         at such time in light of the circumstances under which such information
         was provided. On the Closing Date, the Closing Date Projections
         represent, and as of the date on which any other Projections are
         delivered to Lender, such additional Projections represent Borrowers'
         good faith best estimate of its future performance for the periods
         covered thereby.
     20. Indebtedness. Set forth on Schedule 5.20 is a true and complete list of
         all Indebtedness of each Borrower and its Subsidiaries outstanding
         immediately prior to the Closing Date that is to remain outstanding
         after the Closing Date and such Schedule accurately reflects the
         aggregate principal amount of such Indebtedness and the principal terms
         thereof.
     21. Regulation U. None of Borrowers, nor any of their Subsidiaries is, nor
         will be, engaged in the business of extending credit for the purpose of
         purchasing or carrying margin stock (within the meaning of Regulations
         T, U or X of the Board of Governors of the Federal Reserve System), and
         no proceeds of any Advance will be used to purchase or carry any margin
         stock or to extend credit to others for the purpose of purchasing or
         carrying any margin stock.
     22. Permits, Etc. Borrowers and each of their Subsidiaries have, and are in
         compliance with, all permits, licenses, authorizations, approvals,
         entitlements and accreditations required for such Person lawfully to
         own, lease, manage or operate, or to acquire, each business and the
         Real Property currently owned, leased, managed or operated, or to be
         acquired, by such Person except for such permits, licenses,
         authorizations, approvals, entitlements and accreditations the absence
         of which could not reasonably be expected to result in a Material
         Adverse Change. To Borrowers' knowledge, no condition exists or event
         has occurred that, in itself or with the giving of notice or lapse of
         time or both, would result in the suspension, revocation, impairment,
         forfeiture or non-renewal of any such permit, license, authorization,
         approval, entitlement or accreditation, and, to Borrowers' knowledge,
         there is no claim that any thereof is not in full force and effect.
     23. Life Insurance Polices. Schedule L-1 hereto sets forth, as of the
         Closing Date, all life insurance policies in which any Borrower has an
         interest, the name of the insured, beneficiary and issuer of each such
         policy, and the cash surrender value of each such policy. Except as
         otherwise set forth on Schedule L-1, there are no restrictions or
         prohibitions on any Borrower's right to assign the Life Insurance
         Policies to Lender, such Borrower is the owner and beneficiary of each
         Life Insurance Policy, such Borrower has not assigned or pledged any
         Life Insurance Policy or any of its rights or interests therein to any
         other Person (other than Existing Lender), there are no loans
         outstanding against any of the Life Insurance Policies, each such Life
         Insurance Policy is validly existing. No Borrower nor, to the best of
         such Borrower's knowledge any other Person, is in default of any of its
         respective obligations under such Life Insurance Policies. No Borrower
         has received notice of (x) the pending termination by the issuer
         thereof of any such Life Insurance Policy or (y) any premiums that are
         due and owing on any such Life Insurance Policy.

 3. AFFIRMATIVE COVENANTS.

    Each Borrower covenants and agrees that, so long as any credit hereunder
    shall be available and until full and final payment of the Obligations,
    Borrowers shall and shall cause each of their respective Subsidiaries to do
    all of the following:

     1. Accounting System. Maintain a system of accounting that enables
        Borrowers and their Subsidiaries to produce financial statements in
        accordance with GAAP and maintain records pertaining to the Collateral
        that contain information as from time to time reasonably may be
        requested by Lender. Borrowers and their Subsidiaries also shall keep an
        inventory reporting system that shows all additions, sales, claims,
        returns, and allowances with respect to the Inventory.
     2. Collateral Reporting. Provide Lender with the following documents at the
        following times in form satisfactory to Lender:
    
        Daily
        
         a. a sales journal, collection journal, and credit register since the
            last such schedule and a calculation of the Borrowing Base as of
            such date,
         b. notice of all returns, disputes, or claims.
        
        Weekly
        
        (c) Inventory reports specifying each Borrower's cost and the wholesale
        market value of its Inventory, by location, with additional detail
        showing additions to and deletions from the Inventory; and
        
        (d) a summary, by vendor, of each Borrower's accounts payable and any
        book overdraft,
        
        Monthly (not later than the 10th day of each month)
        
        (e) a detailed calculation of the Borrowing Base (including detail
        regarding those Accounts that are not Eligible Accounts),
        
        (f) a detailed aging, by total, of the Accounts, together with a
        reconciliation to the detailed calculation of the Borrowing Base
        previously provided to Lender.
        
         
        
         
        
        (g) Inventory reports specifying each Borrower's cost and wholesale
        market value of its Inventory, by location, in accordance with the
        categories set forth in the appraisals
        
        provided to Lender, with additional detail showing additions to and
        deletions from the Inventory,
        
         
        
        (h) a calculation of Dilution for the prior month, and
        
        (i) a revised summary of the cash surrender value of each of the Life
        Insurance Policies.
        
        Quarterly
        
        (j) a detailed list of each Borrower's customers, and
        
        (k) a report regarding each Borrower's accrued, but unpaid, ad valorem
        taxes.
        
        Upon request by Lender
        
        (l) copies of invoices in connection with the Accounts, credit memos,
        remittance advices, deposit slips, shipping and delivery documents in
        connection with the Accounts and, for Inventory and Equipment acquired
        by Borrowers, purchase orders and invoices, and
        
         
        
        (m) such other reports as to the Collateral, or the financial condition
        of Borrowers as Lender may request.
    
         
    
        In addition, each Borrower agrees to cooperate fully with Lender to
        facilitate and implement a system of electronic collateral reporting,
        satisfactory in form and substance to Lender, in order to provide
        electronic reporting of each of the items set forth above.
    
     3. Financial Statements, Reports, Certificates. Deliver to Lender:
         a. as soon as available, but in any event within 30 days (45 days in
            the case of a month that is the end of one of the first 3 fiscal
            quarters in a fiscal year) after the end of each month during each
            of Parent's fiscal years,
             i.  a company prepared consolidated balance sheet, income
                 statement, and statement of cash flow covering Parent's and its
                 Subsidiaries' operations during such period,
             ii. a certificate signed by the chief financial officer of Parent
                 to the effect that:

 A. the financial statements delivered hereunder have been prepared in
    accordance with GAAP (except for the lack of footnotes and being subject to
    year-end audit adjustments) and fairly present in all material respects the
    financial condition of Parent and its Subsidiaries,
 B. the representations and warranties of Borrowers and of each Subsidiary of
    Borrowers contained in this Agreement and the other Loan Documents are true
    and correct in all material respects on and as of the date of such
    certificate, as though made on and as of such date (except to the extent
    that such representations and warranties relate solely to an earlier date),
    and
 C. there does not exist any condition or event that constitutes a Default or
    Event of Default (or, to the extent of any non-compliance, describing such
    non-compliance as to which he or she may have knowledge and what action
    Borrowers have taken, are taking, or propose to take with respect thereto),
    and

 i. for each month that is the date on which a financial covenant in Section
    7.20 is to be tested, a Compliance Certificate demonstrating, in reasonable
    detail, compliance at the end of such period with the applicable financial
    covenants contained in Section 7.20,

 a. as soon as available, but in any event within 90 days after the end of each
    of Parent's fiscal years,
     i.  financial statements of Parent and its Subsidiaries for each such
         fiscal year, audited by independent certified public accountants
         reasonably acceptable to Lender and certified, without any
         qualifications, by such accountants to have been prepared in accordance
         with GAAP (such audited financial statements to include a balance
         sheet, income statement, and statement of cash flow and, if prepared,
         such accountants' letter to management), and
     ii. a certificate of such accountants addressed to Lender stating that such
         accountants do not have knowledge of the existence of any Default or
         Event of Default under Section 7.20,

 b. as soon as available, but in any event within 30 days prior to the start of
    each of Parent's fiscal years,
     i. copies of Borrowers' Projections, the form and substance (including as
        to scope and underlying assumptions) of which are satisfactory to
        Lender, in its sole discretion, for the forthcoming 2 years, year by
        year, and for the forthcoming fiscal year, month by month, certified by
        the chief financial officer of Parent as being such officer's good faith
        best estimate of the financial performance of Parent and its
        Subsidiaries during the period covered thereby,

 c. if and when filed by any Borrower or any Subsidiary of any Borrower,
     i.   10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
          reports,
     ii.  any other filings made by any Borrower or any Subsidiary of any
          Borrower with the SEC,
     iii. copies of Borrowers' federal income tax returns, and any amendments
          thereto, filed with the IRS, and
     iv.  any other information that is provided by Parent to its shareholders
          generally,

 d. if and when filed by any Borrower or any Subsidiary of such Borrower and as
    requested by Lender, satisfactory evidence of payment of applicable excise
    taxes in each jurisdictions in which (i) any such Borrower or such
    Subsidiary conducts business or is required to pay any such excise tax, (ii)
    where Borrower's or such Subsidiary's failure to pay any such applicable
    excise tax would result in a Lien on the properties or assets of such
    Borrower or such Subsidiary, or (iii) where such Borrower's or such
    Subsidiary's failure to pay any such applicable excise tax reasonably could
    be expected to result in a Material Adverse Change,
 e. as soon as a Borrower or any Subsidiary of such Borrower has knowledge of
    any event or condition that constitutes a Default or an Event of Default,
    notice thereof and a statement of the curative action that Borrowers or such
    Subsidiary propose to take with respect thereto, and
 f. upon the request of Lender, any other report reasonably requested relating
    to the financial condition of Borrowers or their Subsidiaries.

In addition to the financial statements referred to above, Borrowers agree to
deliver financial statements prepared on both a consolidated and consolidating
basis and that no Borrower, or any Subsidiary of a Borrower, will have a fiscal
year different from that of Parent. Borrowers agree that their independent
certified public accountants are authorized to communicate with Lender and to
release to Lender whatever financial information concerning Borrowers that
Lender reasonably may request. Each Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Lender pursuant
to or in accordance with this Agreement, and agree that Lender may contact
directly any such accounting firm or service bureau in order to obtain such
information.

 1.  Guarantor Reports. Cause each Guarantor (excluding Delsoap, Inc. and
     Delmet, Inc., for so long as such Guarantors are inactive, non-operating
     Subsidiaries) to deliver its annual financial statements at the time when
     Parent provides its audited financial statements to Lender and copies of
     all federal income tax returns as soon as the same are available and in any
     event no later than 30 days after the same are required to be filed by law.
     Returns and Allowances
     . Cause returns and allowances as between Borrowers and their Account
     Debtors, to be on the same basis and in accordance with the usual customary
     practices of the applicable Borrower, as they exist at the time of the
     execution and delivery of this Agreement. If, at a time when no Event of
     Default has occurred and is continuing, any Account Debtor returns any
     Inventory to any Borrower, the applicable Borrower promptly shall determine
     the reason for such return and, if the applicable Borrower accepts such
     return, issue a credit memorandum (with a copy to be sent to Lender if such
     credit memorandum exceeds $50,000) in the appropriate amount to such
     Account Debtor. If, at a time when an Event of Default has occurred and is
     continuing, any Account Debtor returns any Inventory to any Borrower, the
     applicable Borrower promptly shall determine the reason for such return
     and, if Lender consents (which consent shall not be unreasonably withheld),
     issue a credit memorandum (with a copy to be sent to Lender) in the
     appropriate amount to such Account Debtor.
 2.  Maintenance of Properties. Maintain and preserve all of its properties
     which are necessary or useful in the proper conduct to its business in good
     working order and condition, ordinary wear and tear excepted, and comply at
     all times with the provisions of all leases to which it is a party as
     lessee, so as to prevent any loss or forfeiture thereof or thereunder.
 3.  Taxes. Cause all assessments and taxes, whether real, personal, or
     otherwise, due or payable by, or imposed, levied, or assessed against
     Borrowers or any of their Subsidiaries or any of their assets to be paid in
     full, before delinquency or before the expiration of any extension period,
     except to the extent that the validity of such assessment or tax shall be
     the subject of a Permitted Protest. Borrowers will, and will cause each of
     their Subsidiaries to, make timely payment or deposit of all tax payments
     and withholding taxes required of it by applicable laws, including those
     laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
     federal income taxes, and will, upon request, furnish Lender with proof
     satisfactory to Lender indicating that the applicable Borrower and its
     Subsidiaries has made such payments or deposits. Borrowers shall deliver
     satisfactory evidence of payment of applicable excise taxes in each
     jurisdictions in which any Borrower and its Subsidiaries is required to pay
     any such excise tax.
 4.  Insurance.
      a. At Borrowers' expense, maintain insurance respecting its property and
         assets wherever located, covering loss or damage by fire, theft,
         explosion, and all other hazards and risks as ordinarily are insured
         against by other Persons engaged in the same or similar businesses.
         Borrowers also shall maintain business interruption, public liability,
         and product liability insurance, as well as insurance against larceny,
         embezzlement, and criminal misappropriation. All such policies of
         insurance shall be in such amounts and with such insurance companies as
         are reasonably satisfactory to Lender. Borrowers shall deliver copies
         of all such policies to Lender with a satisfactory lender's loss
         payable endorsement naming Lender as sole loss payee or additional
         insured, as appropriate. Each policy of insurance or endorsement shall
         contain a clause requiring the insurer to give not less than 30 days'
         prior written notice to Lender in the event of cancellation of the
         policy for any reason whatsoever. Administrative Borrower shall
         promptly notify Lender of any default under that certain Premium
         Finance Agreement dated as of December 19, 2001 between Parent and AFCO
         Premium Credit LLC.
      b. Administrative Borrower shall give Lender prompt notice of any loss
         covered by such insurance. Lender shall have the exclusive right to
         adjust any losses payable under any such insurance policies in excess
         of $100,000, without any liability to Borrowers whatsoever in respect
         of such adjustments. Any monies received as payment for any loss under
         any insurance policy mentioned above (other than liability insurance
         policies) or as payment of any award or compensation for condemnation
         or taking by eminent domain, shall be paid over to Lender to be applied
         at the option of Lender either to the prepayment of the Obligations or
         shall be disbursed to Administrative Borrower under payment terms
         reasonably satisfactory to Lender for application to the cost of
         repairs, replacements, or restorations. Any such repairs, replacements,
         or restorations shall be effected with reasonable promptness and shall
         be of a value at least equal to the value of the items or property
         destroyed prior to such damage or destruction.
      c. Borrowers shall not take out separate insurance concurrent in form or
         contributing in the event of loss with that required to be maintained
         under this Section 6.8, unless Lender is included thereon as named
         insured with the loss payable to Lender under a lender's loss payable
         endorsement or its equivalent. Administrative Borrower immediately
         shall notify Lender whenever such separate insurance is taken out,
         specifying the insurer thereunder and full particulars as to the
         policies evidencing the same, and copies of such policies promptly
         shall be provided to Lender.

     (d) At Borrowers' expense, maintain the Life Insurance Policies. Borrowers
     shall assign all such policies to Lender pursuant to the Assignment of Life
     Insurance Policies and shall cause Lender to be named as the loss payee
     with respect to each such policy. All proceeds payable under any life
     insurance policy shall be payable to Lender to be applied on account of the
     Obligations in accordance with Section 2.4(b). Borrowers acknowledge and
     agree that they will not (i) borrow against any of the Life Insurance
     Policies, (ii) elect any optional mode of settlement permitted by such
     policies or as allowed by the respective insurer, (iii) change the
     beneficiary for such Life Insurance Policies or (iv) change the insured for
     such Life Insurance Policy. Administrative Borrower shall immediately
     notify Lender of the receipt by any Borrower from the respective issuer of
     any of the Life Insurance Policies insurer that any premiums are due and
     owing with respect to such Life Insurance Policies.

 5.  Location of Inventory and Equipment. Except as provided in Section 7.10,
     keep the Inventory and Equipment only at the locations identified on
     Schedule 5.5; provided, however, that Administrative Borrower may amend
     Schedule 5.5 so long as such amendment occurs by written notice to Lender
     not less than 30 days prior to the date on which the Inventory or Equipment
     is moved to such new location, so long as such new location is within the
     continental United States, and so long as, at the time of such written
     notification, the applicable Borrower provides any financing statements or
     fixture filings necessary to perfect and continue perfected the Lender's
     Liens on such assets and also provides to Lender a Collateral Access
     Agreement.
 6.  Compliance with Laws. Comply with the requirements of all applicable laws,
     rules, regulations, and orders of any Governmental Authority, including the
     Fair Labor Standards Act and the Americans With Disabilities Act, other
     than laws, rules, regulations, and orders the non-compliance with which,
     individually or in the aggregate, would not result in and reasonably could
     not be expected to result in a Material Adverse Change.
 7.  Leases. Pay when due all rents and other amounts payable under any leases
     to which any Borrower is a party or by which any Borrower's or any
     Subsidiary of such Borrower's properties and assets are bound, unless such
     payments are the subject of a Permitted Protest.
 8.  Brokerage Commissions. Pay any and all brokerage commission or finders'
     fees incurred by any Borrower in connection with or as a result of
     Borrowers' obtaining financing from Lender under this Agreement. Borrowers
     agree and acknowledge that payment of all such brokerage commissions or
     finders' fees shall be the sole responsibility of Borrowers, and each
     Borrower agrees to indemnify, defend, and hold Lender harmless from and
     against any claim of any broker or finder arising out of Borrowers'
     obtaining financing from Lender under this Agreement.
 9.  Existence. At all times preserve and keep in full force and effect each
     Borrower's and its Subsidiaries' valid existence and good standing and any
     rights and franchises material to Borrowers' and their Subsidiaries'
     businesses.
 10. Environmental.

     (a) Keep any property either owned or operated by any Borrower or any
     Subsidiary of such Borrower free of any Environmental Liens or post bonds
     or other financial assurances sufficient to satisfy the obligations or
     liability evidenced by such Environmental Liens, (b) comply, in all
     material respects, with Environmental Laws and provide to Lender
     documentation of such compliance which Lender reasonably requests, (c)
     promptly notify Lender of any release of a Hazardous Material of any
     reportable quantity from or onto property owned or operated by any Borrower
     or any Subsidiary of such Borrower and take any Remedial Actions required
     to abate said release or otherwise to come into compliance with applicable
     Environmental Law, and (d) promptly provide Lender with written notice
     within 10 days of the receipt of any of the following: (i) notice that an
     Environmental Lien has been filed against any of the real or personal
     property of any Borrower or any Subsidiary of such Borrower, (ii)
     commencement of any Environmental Action or notice that an Environmental
     Action will be filed against any Borrower or any Subsidiary of such
     Borrower, and (iii) notice of a violation, citation, or other
     administrative order which reasonably could be expected to result in a
     Material Adverse Change.

 11. Disclosure Updates. Promptly and in no event later than 5 Business Days
     after obtaining knowledge thereof, (a) notify Lender if any written
     information, exhibit, or report furnished to Lender contained any untrue
     statement of a material fact or omitted to state any material fact
     necessary to make the statements contained therein not misleading in light
     of the circumstances in which made, and (b) correct any defect or error
     that may be discovered therein or in any Loan Document or in the execution,
     acknowledgement, filing, or recordation thereof.
 12. Employee Benefits.
      a. (i) Promptly, and in any event within 10 Business Days after any
         Borrower or any Subsidiary of such Borrower knows or should know that
         an ERISA Event has occurred that reasonably could be expected to result
         in a Material Adverse Change, cause to be delivered to Lender a written
         statement of the chief financial officer of Parent describing such
         ERISA Event and any action that is being taken with respect thereto by
         such Borrower, its Subsidiary or ERISA Affiliate, and any action taken
         or threatened by the IRS, United States Department of Labor, or PBGC,
         and such Borrower or its Subsidiary, as applicable, shall be deemed to
         know all facts known by the administrator of any Benefit Plan of which
         it is the plan sponsor, (ii) promptly, and in any event within 3
         Business Days after the filing thereof with the IRS, a copy of each
         funding waiver request filed with respect to any Benefit Plan and all
         communications received by any Borrower, any Subsidiary of such
         Borrower or, to the knowledge of any Borrower, any ERISA Affiliate with
         respect to such request, and (iii) promptly, and in any event with 3
         Business Days after receipt by any Borrower, any Subsidiary of such
         Borrower or, to the knowledge of any Borrower, any ERISA Affiliate, of
         the PBGC's intention to terminate a Benefit Plan or to have a trustee
         appointed to administer a Benefit Plan, copies of such notice.
      b. Cause to be delivered to Lender, upon Lender's request, each of the
         following: (i) a copy of each Benefit Plan (or, where any such plan is
         not in writing, complete description thereof) (and if applicable,
         related trust agreements or other funding instruments) and all
         amendments thereto, all written interpretations thereof and written
         descriptions thereof that have been distributed to employees or former
         employees of any Borrower or its Subsidiaries; (ii) the most recent
         determination letter issued by the IRS with respect to each Benefit
         Plan; (iii) for the 3 most recent plan years, annual reports on Form
         5500 Series required to be filed with any governmental agency for each
         Benefit Plan; (iv) all actuarial reports prepared for the last 3 plan
         years for each Benefit Plan; (v) a listing of all Multiemployer Plans,
         with the aggregate amount of the most recent annual contributions
         required to be made by any Borrower, any Subsidiary of such Borrower,
         or any ERISA Affiliate to each such plan and copies of the collective
         bargaining agreements requiring such contributions; (vi) any
         information that has been or is provided to any Borrower, any
         Subsidiary of such Borrower or any ERISA Affiliate regarding withdrawal
         liability under any Multiemployer Plan; and (vii) the aggregate amount
         of the most recent annual payments made or to be made to former
         employees of any Borrower or its Subsidiaries under any Retiree Health
         Plan.

 1. NEGATIVE COVENANTS.

    Each Borrower covenants and agrees that, so long as any credit hereunder
    shall be available and until full and final payment of the Obligations,
    Borrowers will not and will not permit any of their respective Subsidiaries
    to do any of the following:

     1.  Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
         become or remain, directly or indirectly, liable with respect to any
         Indebtedness, except:
          a. Indebtedness evidenced by this Agreement and the other Loan
             Documents, together with Indebtedness owed to Underlying Issuers
             with respect to Underlying Letters of Credit;
          b. Indebtedness set forth on Schedule 5.20;
          c. Permitted Purchase Money Indebtedness;
          d. refinancings, renewals, or extensions of Indebtedness permitted
             under clauses (b) and (c) of this Section 7.1 (and continuance or
             renewal of any Permitted Liens associated therewith) so long as:
             (i) the terms and conditions of such refinancings, renewals, or
             extensions do not, in Lender's judgment, materially impair the
             prospects of repayment of the Obligations by Borrowers or
             materially impair Borrowers' or any Subsidiary of Borrowers'
             creditworthiness, (ii) such refinancings, renewals, or extensions
             do not result in an increase in the principal amount of, or
             interest rate with respect to, the Indebtedness so refinanced,
             renewed, or extended, (iii) such refinancings, renewals, or
             extensions do not result in a shortening of the average weighted
             maturity of the Indebtedness so refinanced, renewed, or extended,
             nor are they on terms or conditions, that, taken as a whole, are
             materially more burdensome or restrictive to the applicable
             Borrower or its Subsidiaries, and (iv) if the Indebtedness that is
             refinanced, renewed, or extended was subordinated in right of
             payment to the Obligations, then the terms and conditions of the
             refinancing, renewal, or extension Indebtedness must include
             subordination terms and conditions that are at least as favorable
             to Lender as those that were applicable to the refinanced, renewed,
             or extended Indebtedness; and
          e. Unsecured letters of credit issued for the account of Borrowers in
             an aggregate amount not to exceed $250,000.
    
     2.  Liens. (a) Create, incur, assume, or permit to exist, directly or
         indirectly, any Lien on or with respect to any of its assets, of any
         kind and specifically including, without limitation, any Real Property
         and Equipment wherever located, whether now owned or hereafter
         acquired, or any income or profits therefrom, except for Permitted
         Liens (including Liens that are replacements of Permitted Liens to the
         extent that the original Indebtedness is refinanced, renewed, or
         extended under Section 7.1(d) and so long as the replacement Liens only
         encumber those assets that secured the refinanced, renewed, or extended
         Indebtedness); or (b) pledge or deposit any cash as collateral for any
         unsecured letters of credit issued for the account of Borrowers.
     3.  Restrictions on Fundamental Changes.
          a. Enter into any merger, consolidation, reorganization, or
             recapitalization, or reclassify its Stock, unless Borrowers and
             their Subsidiaries are the sole parties to such transaction and no
             Default or Event of Default has occurred and is continuing or would
             result therefrom.
          b. Liquidate, wind up, or dissolve itself (or suffer any liquidation
             or dissolution).
          c. Convey, sell, lease, license, assign, transfer, or otherwise
             dispose of, in one transaction or a series of transactions, all or
             any substantial part of its assets.
    
     4.  Disposal of Assets. Other than Permitted Dispositions, convey, sell,
         lease, license, assign, transfer, or otherwise dispose of any of the
         assets, including any Real Property, of any Borrower or its
         Subsidiaries.
     5.  Change Name. Change any Borrower's or any Subsidiary of such Borrower's
         name, FEIN, Organizational I.D. Number, corporate structure or
         identity, or add any new fictitious name or reincorporate or reorganize
         itself under the laws of any jurisdiction other than the jurisdiction
         in which it is incorporated or organized as of the date hereof;
         provided, however, that a Borrower or a Subsidiary of such Borrower may
         change its name upon at least 30 days' prior written notice by
         Administrative Borrower to Lender of such change and so long as, at the
         time of such written notification, such Borrower or such Subsidiary
         provides any financing statements or fixture filings necessary to
         perfect and continue perfected Lender's Liens.
     6.  Guarantee. Guarantee or otherwise become in any way liable with respect
         to the obligations of any third Person except by endorsement of
         instruments or items of payment for deposit to the account of Borrowers
         or which are transmitted or turned over to Lender.
     7.  Nature of Business. Make any change in the principal nature of
         Borrowers' or their Subsidiaries' businesses.
     8.  Prepayments and Amendments.
          a. Except in connection with a refinancing permitted by Section
             7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
             Indebtedness of any Borrower or any Subsidiary of such Borrower,
             other than the Obligations in accordance with this Agreement,
          b. Except in connection with a refinancing permitted by Section
             7.1(d), directly or indirectly, amend, modify, alter, increase, or
             change any of the terms or conditions of any agreement, instrument,
             document, indenture, or other writing evidencing or concerning
             Indebtedness permitted under Sections 7.1(b) or (c), and
          c. Fail to notify Lender promptly of any amendment to or termination
             of any Material Contract.
    
     9.  Change of Control. Cause, permit, or suffer, directly or indirectly,
         any Change of Control.
     10. Consignments. Consign any Inventory or sell any Inventory on bill and
         hold, sale or return, sale on approval, or other conditional terms of
         sale; provided, however, Borrowers may consign Inventory with a book
         value not to exceed $200,000 per consignee or $600,000 in the aggregate
         to customers of any Borrower without the consent of Lender.
     11. Distributions. Other than distributions or declaration and payment of
         dividends by a Borrower to another Borrower or a Subsidiary of a
         Borrower, make any distribution or declare or pay any dividends (in
         cash or other property, other than common Stock) on, or purchase,
         acquire, redeem, or retire any of any Borrower's Stock, of any class,
         whether now or hereafter outstanding.
     12. Accounting Methods. Modify or change its method of accounting (other
         than as may be required to conform to GAAP) or enter into, modify, or
         terminate any agreement currently existing, or at any time hereafter
         entered into with any third party accounting firm or service bureau for
         the preparation or storage of Borrowers' accounting records without
         said accounting firms' or service bureaus' agreeing to provide Lender
         information regarding the Collateral or Borrowers' financial condition.
     13. Investments. Except for Permitted Investments, directly or indirectly,
         make or acquire any Investment, or incur any liabilities (including
         contingent obligations) for or in connection with any Investment;
         provided, however, that Borrowers and their Subsidiaries shall not have
         Permitted Investments (other than in the Cash Management Accounts) in
         deposit accounts or Securities Accounts in excess of $10,000
         outstanding at any one time unless the applicable Borrower or its
         Subsidiary, as applicable, and the applicable securities intermediary
         or bank have entered into Control Agreements or similar arrangements
         governing such Permitted Investments, as Lender shall determine in its
         Permitted Discretion, to perfect (and further establish) the Lender's
         Liens in such Permitted Investments.
     14. Transactions with Affiliates. Directly or indirectly enter into or
         permit to exist any transaction with any Affiliate of any Borrower
         (which itself is not a Borrower) except for transactions that are in
         the ordinary course of Borrowers' business, upon fair and reasonable
         terms, that are fully disclosed to Lender, and that are no less
         favorable to Borrowers than would be obtained in an arm's length
         transaction with a non-Affiliate.
     15. Suspension. Suspend or go out of a substantial portion of its business.
     16. Compensation. Increase the annual fee or per-meeting fees paid to the
         members of its Board of Directors during any year by more than 15% over
         the prior year; increase either the base percentage or excess
         percentage of net earnings before income taxes that are used for the
         calculation of bonuses paid to senior divisional managers by more than
         5% of the percentages applied for such purposes in the prior year.
     17. Use of Proceeds. Use the proceeds of the Advances for any purpose other
         than (a) on the Closing Date, (i) to repay in full the outstanding
         principal, accrued interest, and accrued fees and expenses owing to
         Existing Lender, and (ii) to pay transactional fees, costs, and
         expenses incurred in connection with this Agreement, the other Loan
         Documents, and the transactions contemplated hereby and thereby, and
         (b) thereafter, consistent with the terms and conditions hereof, for
         its lawful and permitted purposes.
     18. Change in Location of Chief Executive Office; Inventory and Equipment
         with Bailees. Relocate its chief executive office to a new location
         without Administrative Borrower's providing 30 days' prior written
         notification thereof to Lender and so long as, at the time of such
         written notification, the applicable Borrower provides any financing
         statements or fixture filings necessary to perfect and continue
         perfected the Lender's Liens and also provides to Lender a Collateral
         Access Agreement with respect to such new location. Except as provided
         in Section 7.10, the Inventory and Equipment shall not at any time now
         or hereafter be stored with a bailee, warehouseman, or similar party
         without Lender's prior written consent.
     19. Securities Accounts. Establish or maintain any Securities Account
         unless Lender shall have received a Control Agreement in respect of
         such Securities Account other than those Securities Accounts set forth
         on Schedule 7.19, provided that the aggregate value of such Securities
         Accounts shall not exceed $1,000 at any one time unless the applicable
         Borrower or Subsidiary, as applicable, and the applicable securities
         intermediary or bank have entered into Control Agreements or similar
         arrangements governing such Securities Accounts, as Lender shall
         determine in its Permitted Discretion, to perfect (and further
         establish) the Lender's Liens in such Securities Accounts. Borrowers
         agree to not transfer assets out of any Securities Account; provided,
         however, that, so long as no Event of Default has occurred and is
         continuing or would result therefrom, Borrowers may use such assets
         (and the proceeds thereof) to the extent not prohibited by this
         Agreement.
     20. Financial Covenants.
          a. Fail to maintain:
             Minimum EBITDA
             . EBITDA, measured on a fiscal month-end basis, of not less than
             the required amount set forth in the following table for the
             applicable period set forth opposite thereto;
             
             
             
             Applicable Amount
             
             Applicable Period
             
             $(4,500)
             
             For the 1 month period ending July 31, 2002
             
             $38,000
             
             For the 2 month period ending August 31, 2002
             
             $110,000
             
             For the 3 month period ending September 30, 2002
             
             $331,000
             
             For the 4 month period ending October 31, 2002
             
             $465,000
             
             For the 5 month period ending November 30, 2002
             
             $632,000
             
             For the 6 month period ending December 31, 2002
             
             $832,000
             
             For the 7 month period ending January 31, 2003
             
             $1,098,000
             
             For the 8 month period ending February 28, 2003
             
             $1,404,000
             
             For the 9 month period ending March 31, 2003
             
             $1,734,000
             
             For the 10 month period ending April 30, 2003
             
             $2,085,000
             
             For the 11 month period ending May 31, 2003
             
             $2,426,000
             
             For the 12 month period ending June 30, 2003
             
             $2,713,000
             
             For the 12 month period ending July 31, 2003
             
             $3,000,000
             
             For the 12 month period ending each fiscal month during the period
             commencing on August 1, 2003 and ending on December 31, 2003
             
             $4,000,000
             
             For the 12 month period ending each fiscal month during the period
             commencing on January 1, 2004 and ending on the Maturity Date
             
             
             
             
             
             Tangible Net Worth
             . Tangible Net Worth of at least the required amount set forth in
             the following table as of the applicable date set forth opposite
             thereto:
             
             
             
             Applicable Amount
             
             Applicable Date
             
             $31,300,000
             
             July 31, 2002
             
             $31,100,000
             
             August 31, 2002
             
             $30,900,000
             
             September 30, 2002
             
             $30,700,000
             
             October 31, 2002
             
             $30,600,000
             
             November 30, 2002
             
             $30,500,000
             
             December 31, 2002
             
             $30,400,000
             
             At the end of each fiscal month during the period commencing on
             January 1, 2003 and ending on the Maturity Date
             
             
             
             Excess Availability
             . Excess Availability of not less than the amount set forth in the
             following table for the applicable period set forth opposite
             thereto:
             
             
             
             Applicable Amount
             
             Applicable Date
             
             $2,500,000
             
             At all times prior to and including October 31, 2002
             
             $1,500,000
             
             At all times from and including November 1, 2002 until and
             including January 31, 2003
             
             $1,000,000
             
             At all times after and including February 1, 2003
             
             
             
             Equipment
             . Appraised value that is estimated to be recoverable in an orderly
             liquidation of Borrowers' Equipment of not less than the amount set
             forth in the following table for the applicable period set forth
             opposite thereto:
         
             
         
             Applicable Amount
             
             Applicable Date
             
             $4,000,000
             
             At all times prior to and including July 31, 2002 until and
             including July 31, 2003
             
             $3,200,000
             
             At all times after and including August 1, 2003
         
             
         
          b. Make:
             Capital Expenditures
             . Capital expenditures in any fiscal year or other applicable
             period in excess of the amount set forth in the following table for
             the applicable period:
    
         
    
         Fiscal Year 2002
         
         Fiscal Year 2003
         
         6 Month Period Ending June 30, 2004
         
         $3,200,000
         
         $4,200,000
         
         $2,100,000
    
         
    
          
    
     21. No Prohibited Transactions Under ERISA. Directly or indirectly:
          a. engage, or permit any Person to engage, in any prohibited
             transaction described in Sections 406 of ERISA or 4975 of the IRC
             for which a statutory or class exemption is not available or a
             private exemption has not been previously obtained from the United
             States Department of Labor;
          b. permit to exist with respect to any Benefit Plan any accumulated
             funding deficiency (as defined in Sections 302 of ERISA and 412 of
             the IRC), whether or not waived;
          c. fail, or permit any Subsidiary of any Borrower to fail, to pay
             timely required contributions or annual installments due with
             respect to any waived funding deficiency to any Benefit Plan;
          d. terminate, or permit any Subsidiary of any Borrower to terminate,
             any Benefit Plan if such event would result in any liability of any
             Borrower, any Subsidiary of such Borrower or any ERISA Affiliate
             under Title IV of ERISA;
          e. fail, or permit any Subsidiary of any Borrower to fail, to make any
             required contribution or payment to any Multiemployer Plan;
          f. fail, or permit any Subsidiary of any Borrower to fail, to pay any
             required installment or any other payment required under Section
             412 of the IRC on or before the due date for such installment or
             other payment;
          g. amend, or permit any Subsidiary of any Borrower to amend, a Benefit
             Plan resulting in an increase in current liability for the plan
             year such that any of Borrower, any Subsidiaries of Borrower or
             ERISA Affiliates is required to provide security to such Benefit
             Plan under Section 401(a)(29) of the IRC; or
          h. withdraw, or permit any Subsidiary of any Borrower to withdraw,
             from any Multiemployer Plan where such withdrawal is reasonably
             likely to result in any liability of any such entity under Title IV
             of ERISA;
    
         that, individually or in the aggregate, results in or reasonably would
         be expected to result in a claim against or liability of any Borrower,
         any Subsidiary of such Borrower or any ERISA Affiliate in excess of
         $25,000.
    
     22. Real Property. Acquire any additional Real Property.

 2. EVENTS OF DEFAULT.

    Any one or more of the following events shall constitute an event of default
    (each, an "Event of Default") under this Agreement:

     1.  If Borrowers fail to pay when due and payable or when declared due and
         payable, all or any portion of the Obligations (whether of principal,
         interest (including any interest which, but for the provisions of the
         Bankruptcy Code, would have accrued on such amounts), fees and charges
         due Lender, reimbursement of Lender Expenses, or other amounts
         constituting Obligations);
     2.  (a) If Borrowers or any Guarantor, as applicable, fail to perform, keep
         or observe any term, provision, condition or covenant or agreement
         contained in Sections 6.3(iii) (Financial Statements, Reports,
         Certificates), 6.5 (Allowances), and 6.10 (Compliance with Laws), and
         such failure continues for a period of 5 Business Days, or (b) if
         Borrowers or any Guarantor, as applicable, fail to perform, keep, or
         observe any term, provision, condition, covenant, or agreement
         contained in this Agreement or in any of the other Loan Documents, or
         in any other present or future agreement between Borrowers or any
         Guarantor and Lender; in each case, other than any such term,
         provision, condition, covenant, or agreement that is the subject of
         another provision of this Article 8, in which event such other
         provision of this Article 8 shall govern; provided, that during any
         period of time that any such failure or non-performance of Borrowers or
         any Guarantor, as applicable, referred to in this paragraph exists,
         even if such failure or non-performance is not yet an Event of Default
         by virtue of the existence of a grace or cure period or the
         pre-condition of the giving of a notice, at the option of Lender,
         Lender shall not be required during such period to make Advances to
         Borrowers;
     3.  If any material portion of any Borrower's or any of its Subsidiaries'
         assets is attached, seized, subjected to a writ or distress warrant,
         levied upon, or comes into the possession of any third Person;
     4.  If an Insolvency Proceeding is commenced by any Borrower or any of its
         Subsidiaries;
     5.  If an Insolvency Proceeding is commenced against any Borrower, or any
         of its Subsidiaries, and any of the following events occur: (a) the
         applicable Borrower or the Subsidiary consents to the institution of
         the Insolvency Proceeding against it, (b) the petition commencing the
         Insolvency Proceeding is not timely controverted, (c) the petition
         commencing the Insolvency Proceeding is not dismissed within 45
         calendar days of the date of the filing thereof; provided, however,
         that, during the pendency of such period, Lender shall be relieved of
         its obligation to extend credit hereunder, (d) an interim trustee is
         appointed to take possession of all or any substantial portion of the
         properties or assets of, or to operate all or any substantial portion
         of the business of, any Borrower or any of its Subsidiaries, or (e) an
         order for relief shall have been entered therein;
     6.  If any Borrower or any of its Subsidiaries is enjoined, restrained, or
         in any way prevented by court order from continuing to conduct all or
         any material part of its business affairs;
     7.  If a notice of Lien, levy, or assessment is filed of record with
         respect to any Borrower's or any of its Subsidiaries' assets by the
         United States, or any department, agency, or instrumentality thereof,
         or by any state, county, municipal, or governmental agency, or if any
         taxes or debts owing at any time hereafter to any one or more of such
         entities becomes a Lien, whether choate or otherwise, upon any
         Borrower's or any of its Subsidiaries' assets and the same is not paid
         before such payment is delinquent;
     8.  If a judgment or other claim becomes a Lien or encumbrance upon any
         material portion of any Borrower's or any of its Subsidiaries' assets;
     9.  If there is a default in any Material Contract or any other agreement
         to which any Borrower or any of its Subsidiaries is a party and which
         is material to such Borrower and its Subsidiaries, taken as a whole,
         and such default (a) occurs at the final maturity of the obligations
         thereunder, or (b) results in a right by the other party thereto,
         irrespective of whether exercised, to accelerate the maturity of a
         Borrower's or its Subsidiaries' obligations thereunder, to terminate
         such agreement, or to refuse to renew such agreement pursuant to an
         automatic renewal right therein;
     10. If any Borrower or any of its Subsidiaries makes any payment on account
         of Indebtedness that has been contractually subordinated in right of
         payment to the payment of the Obligations, except to the extent such
         payment is permitted by the terms of the subordination provisions
         applicable to such Indebtedness;
     11. If any misstatement or misrepresentation exists now or hereafter in any
         warranty, representation, statement, or Record made to Lender by any
         Borrower, its Subsidiaries, or any officer, employee, agent, or
         director of any Borrower or any of its Subsidiaries;
     12. If the obligation of any Guarantor under its Guaranty or the Guarantor
         Security Agreement is limited or terminated by operation of law or by
         such Guarantor thereunder;
     13. If this Agreement or any other Loan Document that purports to create a
         Lien, shall, for any reason, fail or cease to create a valid and
         perfected and, except to the extent permitted by the terms hereof or
         thereof, first priority Lien on or security interest in the Collateral
         covered hereby or thereby; or
     14. Any provision of any Loan Document shall at any time for any reason be
         declared to be null and void, or the validity or enforceability thereof
         shall be contested by any Borrower or any Guarantor, or a proceeding
         shall be commenced by any Borrower, any Guarantor or by any
         Governmental Authority having jurisdiction over any Borrower or any
         Guarantor, seeking to establish the invalidity or unenforceability
         thereof, or any Borrower or any Guarantor shall deny that any Borrower
         or such Guarantor has any liability or obligation purported to be
         created under any Loan Document.

 3. THE LENDER'S RIGHTS AND REMEDIES.
     1. Rights and Remedies. Upon the occurrence, and during the continuation,
        of an Event of Default, Lender (at its election but without notice of
        its election and without demand) may do any one or more of the
        following, all of which are authorized by Borrowers:
         a. Declare all Obligations, whether evidenced by this Agreement, by any
            of the other Loan Documents, or otherwise, immediately due and
            payable;
         b. Cease advancing money or extending credit to or for the benefit of
            Borrowers under this Agreement, under any of the Loan Documents, or
            under any other agreement between Borrowers and Lender;
         c. Terminate this Agreement and any of the other Loan Documents as to
            any future liability or obligation of Lender, but without affecting
            any of the Lender's Liens in the Collateral and without affecting
            the Obligations;
         d. Settle or adjust disputes and claims directly with Account Debtors
            for amounts and upon terms which Lender considers advisable, and in
            such cases, Lender will credit the Loan Account with only the net
            amounts received by Lender in payment of such disputed Accounts
            after deducting all Lender Expenses incurred or expended in
            connection therewith;
         e. Cause Borrowers to hold all returned Inventory in trust for Lender,
            segregate all returned Inventory from all other assets of Borrowers
            or in Borrowers' possession and conspicuously label said returned
            Inventory as the property of Lender;
         f. Without notice to or demand upon any Borrower or any Guarantor, make
            such payments and do such acts as Lender considers necessary or
            reasonable to protect its security interests in the Collateral. Each
            Borrower agrees to assemble the Personal Property Collateral if
            Lender so requires, and to make the Personal Property Collateral
            available to Lender at a place that Lender may designate which is
            reasonably convenient to both parties. Each Borrower authorizes
            Lender to enter the premises where the Personal Property Collateral
            is located, to take and maintain possession of the Personal Property
            Collateral, or any part of it, and to pay, purchase, contest, or
            compromise any Lien that in Lender's determination appears to
            conflict with the Lender's Liens and to pay all expenses incurred in
            connection therewith and to charge Borrowers' Loan Account therefor.
            With respect to any of Borrowers' owned or leased premises, each
            Borrower hereby grants Lender a license to enter into possession of
            such premises and to occupy the same, without charge, in order to
            exercise any of Lender's rights or remedies provided herein, at law,
            in equity, or otherwise;
         g. Without notice to any Borrower (such notice being expressly waived),
            and without constituting a retention of any collateral in
            satisfaction of an obligation (within the meaning of the Code), set
            off and apply to the Obligations any and all (i) balances and
            deposits of any Borrower held by Lender (including any amounts
            received in the Cash Management Accounts), or (ii) Indebtedness at
            any time owing to or for the credit or the account of any Borrower
            held by Lender;
         h. Hold, as cash collateral, any and all balances and deposits of any
            Borrower held by Lender, and any amounts received in the Cash
            Management Accounts, to secure the full and final repayment of all
            of the Obligations;
         i. Ship, reclaim, recover, store, finish, maintain, repair, prepare for
            sale, advertise for sale, and sell (in the manner provided for
            herein) the Personal Property Collateral. Each Borrower hereby
            grants to Lender a license or other right to use, without charge,
            such Borrower's labels, patents, copyrights, trade secrets, trade
            names, trademarks, service marks, domain names and advertising
            matter, or any property of a similar nature, as it pertains to the
            Personal Property Collateral, in completing production of,
            advertising for sale, and selling any Personal Property Collateral
            and such Borrower's rights under all licenses and all franchise
            agreements shall inure to Lender's benefit;
         j. Sell the Personal Property Collateral at either a public or private
            sale, or both, by way of one or more contracts or transactions, for
            cash or on terms, in such manner and at such places (including
            Borrowers' or their Subsidiaries' premises) as Lender determines is
            commercially reasonable. It is not necessary that the Personal
            Property Collateral be present at any such sale;
         k. Lender shall give notice of the disposition of the Personal Property
            Collateral as follows:
             i.  Lender shall give Administrative Borrower (for the benefit of
                 the applicable Borrower) a notice in writing of the time and
                 place of public sale, or, if the sale is a private sale or some
                 other disposition other than a public sale is to be made of the
                 Personal Property Collateral, then the time on or after which
                 the private sale or other disposition is to be made; and
             ii. The notice shall be personally delivered or mailed, postage
                 prepaid, to Administrative Borrower as provided in Section 12,
                 at least 10 days before the earliest time of disposition set
                 forth in the notice; no notice needs to be given prior to the
                 disposition of any portion of the Personal Property Collateral
                 that is perishable or threatens to decline speedily in value or
                 that is of a type customarily sold on a recognized market;
        
         l. Lender may credit bid and purchase at any public sale;
         m. Lender may seek the appointment of a receiver or keeper to take
            possession of all or any portion of the Collateral or to operate
            same and, to the maximum extent permitted by law, may seek the
            appointment of such a receiver without the requirement of prior
            notice or a hearing;
         n. Lender shall have all other rights and remedies available to it at
            law or in equity pursuant to any other Loan Documents; and
         o. Any deficiency that exists after disposition of the Personal
            Property Collateral as provided above will be paid immediately by
            Borrowers. Any excess will be returned, without interest and subject
            to the rights of third Persons, by Lender to Administrative Borrower
            (for the benefit of the applicable Borrower); provided, however,
            that Lender shall only have the rights granted in subsections
            9.1(i), (j), (l) and (m) if it has first instituted an action
            pursuant to subsection 9.1(a), (b) or (c) above.
    
     2. Remedies Cumulative. The rights and remedies of Lender under this
        Agreement, the other Loan Documents, and all other agreements shall be
        cumulative. Lender shall have all other rights and remedies not
        inconsistent herewith as provided by contract, under the Code, by law,
        or in equity. No exercise by Lender of one right or remedy shall be
        deemed an election, and no waiver by Lender of any Event of Default
        shall be deemed a continuing waiver. No delay by Lender shall constitute
        a waiver, election, or acquiescence by it.

 4. TAXES AND EXPENSES.

    If any Borrower fails to pay any monies (whether taxes, assessments,
    insurance premiums, or, in the case of leased properties or assets, rents or
    other amounts payable under such leases) due to third Persons, or fails to
    make any deposits or furnish any required proof of payment or deposit, all
    as required under the terms of this Agreement, then, Lender, in its sole
    discretion and without prior notice to any Borrower, may do any or all of
    the following: (a) make payment of the same or any part thereof, (b) set up
    such reserves in Borrowers' Loan Account as Lender deems necessary to
    protect Lender from the exposure created by such failure, or (c) in the case
    of the failure to comply with Section 6.8 hereof, obtain and maintain
    insurance policies of the type described in Section 6.8 and take any action
    with respect to such policies as Lender deems prudent. Any such amounts paid
    by Lender shall constitute Lender Expenses and any such payments shall not
    constitute an agreement by Lender to make similar payments in the future or
    a waiver by Lender of any Event of Default under this Agreement. Lender need
    not inquire as to, or contest the validity of, any such expense, tax, or
    Lien and the receipt of the usual official notice for the payment thereof
    shall be conclusive evidence that the same was validly due and owing.

 5. WAIVERS; INDEMNIFICATION.
     1. Demand; Protest. Each Borrower waives demand, protest, notice of
        protest, notice of default or dishonor, notice of payment and
        nonpayment, nonpayment at maturity, release, compromise, settlement,
        extension, or renewal of documents, instruments, Chattel Paper, and
        guarantees at any time held by Lender on which any such Borrower may in
        any way be liable.
     2. Lender's Liability for Collateral. Each Borrower hereby agrees that: (a)
        so long as Lender complies with its obligations, if any, under the Code,
        Lender shall not in any way or manner be liable or responsible for: (i)
        the safekeeping of the Collateral, (ii) any loss or damage thereto
        occurring or arising in any manner or fashion from any cause, (iii) any
        diminution in the value thereof, or (iv) any act or default of any
        carrier, warehouseman, bailee, forwarding agency, or other Person, and
        (b) all risk of loss, damage, or destruction of the Collateral shall be
        borne by Borrowers.
     3. Indemnification. Each Borrower shall pay, indemnify, defend, and hold
        the Lender-Related Persons, each Participant, and each of their
        respective officers, directors, employees, agents, attorneys and
        attorneys-in-fact (each, an "Indemnified Person") harmless (to the
        fullest extent permitted by law) from and against any and all claims,
        demands, suits, actions, investigations, proceedings, and damages, and
        all reasonable attorneys' fees and disbursements and other costs and
        expenses actually incurred in connection therewith (as and when they are
        incurred and irrespective of whether suit is brought), at any time
        asserted against, imposed upon, or incurred by any of them (a) in
        connection with or as a result of or related to the execution, delivery,
        enforcement, performance, or administration of this Agreement, any of
        the other Loan Documents, or the transactions contemplated hereby or
        thereby, and (b) with respect to any investigation, litigation, or
        proceeding related to this Agreement, any other Loan Document, or the
        use of the proceeds of the credit provided hereunder (irrespective of
        whether any Indemnified Person is a party thereto), or any act,
        omission, event, or circumstance in any manner related thereto (all the
        foregoing, collectively, the "Indemnified Liabilities"). The foregoing
        to the contrary notwithstanding, Borrowers shall have no obligation to
        any Indemnified Person under this Section 11.3 with respect to any
        Indemnified Liability that a court of competent jurisdiction finally
        determines to have resulted from the gross negligence or willful
        misconduct of such Indemnified Person. This provision shall survive the
        termination of this Agreement and the repayment of the Obligations. If
        any Indemnified Person makes any payment to any other Indemnified Person
        with respect to an Indemnified Liability as to which Borrowers were
        required to indemnify the Indemnified Person receiving such payment, the
        Indemnified Person making such payment is entitled to be indemnified and
        reimbursed by Borrowers with respect thereto. WITHOUT LIMITATION, THE
        FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT
        TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE
        OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF
        ANY OTHER PERSON.

 6. NOTICES.

    Unless otherwise provided in this Agreement, all notices or demands by
    Borrowers or Lender to the other relating to this Agreement or any other
    Loan Document shall be in writing and (except for financial statements and
    other informational documents which may be sent by first-class mail, postage
    prepaid) shall be personally delivered or sent by registered or certified
    mail (postage prepaid, return receipt requested), overnight courier,
    electronic mail (at such email addresses as the Administrative Borrower or
    Lender, as applicable, may designate to each other in accordance herewith),
    or telefacsimile to Borrowers in care of Administrative Borrower or to
    Lender, as the case may be, at its address set forth below:

    If to Administrative

    Borrower: SYNALLOY CORPORATION

    2155 West Croft Circle

    Spartanburg, South Carolina 29304

    Attn: Mr. Gregory M. Bowie, VP, Finance

    Fax No. (864) 596-1501

    with copies to: HAYNSWORTH SINKLER BOYD, P.A.

    P. O. Box 2048

    Greenville, South Carolina 29601

    Attn: Joseph J. Blake, Jr., Esq.

    Fax No.: (864) 240-3300

    If to Lender: FOOTHILL CAPITAL CORPORATION

    1000 Abernathy Rd., N.E., Suite 1450

    Atlanta, Georgia 30328

    Attn: Business Finance Division Manager

    Fax No.: (770) 508-1374

    If to Lender: FOOTHILL CAPITAL CORPORATION

    2450 Colorado Avenue

    Suite 3000 West

    Santa Monica, California 90404

    Attn: Business Finance Division Manager

    Fax No. (310) 459-7413

    with copies to: PAUL, HASTINGS, JANOFSKY & WALKER

    LLP

    600 Peachtree Street, N.E., Suite 2400

    Atlanta, Georgia 30308

    Attn: Chris D. Molen, Esq.

    Fax No: (404) 815-2424.

    Lender and Borrowers may change the address at which they are to receive
    notices hereunder, by notice in writing in the foregoing manner given to the
    other party. All notices or demands sent in accordance with this Section 12,
    other than notices by Lender in connection with enforcement rights against
    the Collateral under the provisions of the Code, shall be deemed received on
    the earlier of the date of actual receipt or 3 Business Days after the
    deposit thereof in the mail. Each Borrower acknowledges and agrees that
    notices sent by Lender in connection with the exercise of enforcement rights
    against Collateral under the provisions of the Code shall be deemed sent
    when deposited in the mail or personally delivered, or, where permitted by
    law, transmitted by telefacsimile or any other method set forth above.

 7. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
     a. THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
        EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
        OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
        ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
        THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
        RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
        CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
     b. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
        WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
        LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
        FULTON, STATE OF GEORGIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
        ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
        LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS
        TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
        FOUND. BORROWERS AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER
        APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
        NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
        BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

    BORROWERS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
    ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
    DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
    CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
    LAW OR STATUTORY CLAIMS. BORROWERS AND LENDER REPRESENT THAT EACH HAS
    REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
    TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
    LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
    TRIAL BY THE COURT.
    
    ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
     1. Assignments and Participations

    .
     a. Lender may assign and delegate to one or more assignees (each an
        "Assignee") all, or any ratable part of all, of the Obligations and the
        other rights and obligations of Lender hereunder and under the other
        Loan Documents; provided, however, that Borrowers may continue to deal
        solely and directly with Lender in connection with the interest so
        assigned to an Assignee until (i) written notice of such assignment,
        together with payment instructions, addresses, and (ii) related
        information with respect to the Assignee, have been given to
        Administrative Borrower by Lender and the Assignee an appropriate
        assignment and acceptance agreement.
     b. From and after the date that Lender provides Administrative Borrower
        with such written notice and executed assignment and acceptance
        agreement, (i) the Assignee thereunder shall be a party hereto and, to
        the extent that rights and obligations hereunder have been assigned to
        it pursuant to such assignment and acceptance agreement, shall have the
        assigned and delegated rights and obligations of a Lender under the Loan
        Documents, and (ii) Lender shall, to the extent that rights and
        obligations hereunder and under the other Loan Documents have been
        assigned and delegated by it pursuant to such assignment and acceptance
        agreement, relinquish its rights (except with respect to Section 11.3
        hereof) and be released from its obligations under this Agreement (and
        in the case of an assignment and acceptance agreement covering all or
        the remaining portion of Lender's rights and obligations under this
        Agreement and the other Loan Documents, Lender shall cease to be a party
        hereto and thereto), and such assignment shall effect a novation between
        Borrowers and the Assignee.
     c. Immediately upon Borrower's receipt of such fully executed assignment
        and acceptance agreement, this Agreement shall be deemed to be amended
        to the extent, but only to the extent, necessary to reflect the addition
        of the Assignee and the resulting adjustment of the rights and duties of
        Lender arising therefrom.
     d. Lender may at any time sell to one or more commercial banks, financial
        institutions, or other Persons not Affiliates of Lender (a
        "Participant") participating interests in Obligations and the other
        rights and interests of Lender hereunder and under the other Loan
        Documents, provided, however, that (i) Lender shall remain the "Lender"
        for all purposes of this Agreement and the other Loan Documents and the
        Participant receiving the participating interest in the Obligations and
        the other rights and interests of Lender hereunder shall not constitute
        a "Lender" hereunder or under the other Loan Documents and Lender's
        obligations under this Agreement shall remain unchanged, (ii) Lender
        shall remain solely responsible for the performance of such obligations,
        (iii) Borrowers and Lender shall continue to deal solely and directly
        with each other in connection with Lender's rights and obligations under
        this Agreement and the other Loan Documents, (iv) Lender shall not
        transfer or grant any participating interest under which the Participant
        has the right to approve any amendment to, or any consent or waiver with
        respect to, this Agreement or any other Loan Document, except to the
        extent such amendment to, or consent or waiver with respect to this
        Agreement or of any other Loan Document would (A) extend the final
        maturity date of the Obligations hereunder in which such Participant is
        participating, (B) reduce the interest rate applicable to the
        Obligations hereunder in which such Participant is participating, (C)
        release all or a material portion of the Collateral or guaranties
        (except to the extent expressly provided herein or in any of the Loan
        Documents) supporting the Obligations hereunder in which such
        Participant is participating, (D) postpone the payment of, or reduce the
        amount of, the interest or fees payable to such Participant through
        Lender, or (E) change the amount or due dates of scheduled principal
        repayments or prepayments or premiums; and (v) all amounts payable by
        Borrowers hereunder shall be determined as if Lender had not sold such
        participation; except that, if amounts outstanding under this Agreement
        are due and unpaid, or shall have been declared or shall have become due
        and payable upon the occurrence of an Event of Default, each Participant
        shall be deemed to have the right of set-off in respect of its
        participating interest in amounts owing under this Agreement to the same
        extent as if the amount of its participating interest were owing
        directly to it as a Lender under this Agreement. The rights of any
        Participant only shall be derivative through Lender and no Participant
        shall have any rights under this Agreement or the other Loan Documents
        or any direct rights as to the Borrowers, the Collections, the
        Collateral, or otherwise in respect of the Obligations. No Participant
        shall have the right to participate directly in the making of decisions
        by Lender.
     e. In connection with any such assignment or participation or proposed
        assignment or participation, a Lender may disclose all documents and
        information which it now or hereafter may have relating to Borrowers or
        Borrowers' business.
     f. Any other provision in this Agreement notwithstanding, Lender may at any
        time create a security interest in, or pledge, all or any portion of its
        rights under and interest in this Agreement in favor of any Federal
        Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
        or United States Treasury Regulation 31 CFR Section 203.14, and such
        Federal Reserve Bank may enforce such pledge or security interest in any
        manner permitted under applicable law.

 8. Successors. This Agreement shall bind and inure to the benefit of the
    respective successors and assigns of each of the parties; provided, however,
    that Borrowers may not assign this Agreement or any rights or duties
    hereunder without Lender's prior written consent and any prohibited
    assignment shall be absolutely void ab initio. No consent to assignment by
    Lender shall release any Borrower from its Obligations. Lender may assign
    this Agreement and the other Loan Documents and its rights and duties
    hereunder and thereunder pursuant to Section 14.1 hereof and, except as
    expressly required pursuant to Section 14.1 hereof, no consent or approval
    by any Borrower is required in connection with any such assignment.
 9. Confidentiality. Lender agrees to keep all Reports and other material,
    non-public information regarding Borrowers and their Subsidiaries and their
    operations, assets, and existing and contemplated business plans in a
    confidential manner; it being understood and agreed by Borrowers that Lender
    may make disclosures (i) to counsel for and other advisors, accountants, and
    auditors to Lender, (ii) reasonably required by any bona fide potential or
    actual Assignee or Participant in connection with any contemplated or actual
    assignment or transfer by Lender of an interest herein or any participation
    interest in Lender's rights hereunder, (iii) of information that has become
    public by disclosures made by Persons other than Lender, its Affiliates,
    assignees, transferees, or Participants, or (iv) as required or requested by
    any court, governmental or administrative agency, pursuant to any subpoena
    or other legal process, or by any law, statute, regulation, or court order;
    provided, however, that, unless prohibited by applicable law, statute,
    regulation, or court order, Lender shall notify Borrower of any request by
    any court, governmental or administrative agency, or pursuant to any
    subpoena or other legal process for disclosure of any such non-public
    material information concurrent with, or where practicable, prior to the
    disclosure thereof; provided further, that any disclosures pursuant to the
    preceding clauses (i) and (ii) shall be made subject to the recipient of the
    disclosures agreeing to be bound by the confidentiality provisions hereof.

AMENDMENTS; WAIVERS.

 1. Amendments and Waivers. No amendment or waiver of any provision of this
    Agreement or any other Loan Document, and no consent with respect to any
    departure by Borrowers therefrom, shall be effective unless the same shall
    be in writing and signed by Lender and Administrative Borrower (on behalf of
    all Borrowers) and then any such waiver or consent shall be effective only
    in the specific instance and for the specific purpose for which given.
 2. No Waivers; Cumulative Remedies. No failure by Lender to exercise any right,
    remedy, or option under this Agreement or, any other Loan Document, or delay
    by Lender in exercising the same, will operate as a waiver thereof. No
    waiver by Lender will be effective unless it is in writing, and then only to
    the extent specifically stated. No waiver by Lender on any occasion shall
    affect or diminish Lender's rights thereafter to require strict performance
    by Borrowers of any provision of this Agreement. Lender's rights under this
    Agreement and the other Loan Documents will be cumulative and not exclusive
    of any other right or remedy that Lender may have.

GENERAL PROVISIONS.
 1.  Effectiveness. This Agreement shall be binding and deemed effective when
     executed by Borrowers and Lender.
 2.  Section Headings. Headings and numbers have been set forth herein for
     convenience only. Unless the contrary is compelled by the context,
     everything contained in each Section applies equally to this entire
     Agreement.
 3.  Interpretation. Neither this Agreement nor any uncertainty or ambiguity
     herein shall be construed or resolved against Lender or Borrowers, whether
     under any rule of construction or otherwise. On the contrary, this
     Agreement has been reviewed by all parties and shall be construed and
     interpreted according to the ordinary meaning of the words used so as to
     accomplish fairly the purposes and intentions of all parties hereto.
 4.  Severability of Provisions. Each provision of this Agreement shall be
     severable from every other provision of this Agreement for the purpose of
     determining the legal enforceability of any specific provision.
 5.  Withholding Taxes. All payments made by Borrowers hereunder or under any
     note will be made without setoff, counterclaim, or other defense, except as
     required by applicable law other than for Taxes (as defined below). All
     such payments will be made free and clear of, and without deduction or
     withholding for, any present or future taxes, levies, imposts, duties,
     fees, assessments or other charges of whatever nature now or hereafter
     imposed by any jurisdiction (other than the United States) or by any
     political subdivision or taxing authority thereof or therein (other than of
     the United States) with respect to such payments (but excluding, any tax
     imposed by any jurisdiction or by any political subdivision or taxing
     authority thereof or therein (i) measured by or based on the net income or
     net profits of Lender, or (ii) to the extent that such tax results from a
     change in the circumstances of Lender, including a change in the residence,
     place of organization, or principal place of business of Lender, or a
     change in the branch or lending office of Lender participating in the
     transactions set forth herein) and all interest, penalties or similar
     liabilities with respect thereto (all such non-excluded taxes, levies,
     imposts, duties, fees, assessments or other charges being referred to
     collectively as "Taxes"). If any Taxes are so levied or imposed, each
     Borrower agrees to pay the full amount of such Taxes, and such additional
     amounts as may be necessary so that every payment of all amounts due under
     this Agreement or under any note, including any amount paid pursuant to
     this Section 16.5 after withholding or deduction for or on account of any
     Taxes, will not be less than the amount provided for herein; provided,
     however, that Borrowers shall not be required to increase any such amounts
     payable to Lender if the increase in such amount payable results from
     Lender's own willful misconduct or gross negligence. Borrowers will furnish
     to Lender, as promptly as possible after the date the payment of any Taxes
     is due pursuant to applicable law, certified copies of tax receipts
     evidencing such payment by Borrowers.
 6.  Amendments in Writing. This Agreement only can be amended by a writing
     signed by Lender and each of the Borrowers.
 7.  Counterparts; Telefacsimile Execution. This Agreement may be executed in
     any number of counterparts and by different parties on separate
     counterparts, each of which, when executed and delivered, shall be deemed
     to be an original, and all of which, when taken together, shall constitute
     but one and the same Agreement. Delivery of an executed counterpart of this
     Agreement by telefacsimile shall be equally as effective as delivery of an
     original executed counterpart of this Agreement. Any party delivering an
     executed counterpart of this Agreement by telefacsimile also shall deliver
     an original executed counterpart of this Agreement but the failure to
     deliver an original executed counterpart shall not affect the validity,
     enforceability, and binding effect of this Agreement. The foregoing shall
     apply to each other Loan Document mutatis mutandis.
 8.  Revival and Reinstatement of Obligations. If the incurrence or payment of
     the Obligations by any Borrower or any Guarantor or the transfer to Lender
     of any property should for any reason subsequently be declared to be void
     or voidable under any state or federal law relating to creditors' rights,
     including provisions of the Bankruptcy Code relating to fraudulent
     conveyances, preferences, or other voidable or recoverable payments of
     money or transfers of property (collectively, a "Voidable Transfer"), and
     if Lender is required to repay or restore, in whole or in part, any such
     Voidable Transfer, or elects to do so upon the reasonable advice of its
     counsel, then, as to any such Voidable Transfer, or the amount thereof that
     Lender is required or elects to repay or restore, and as to all reasonable
     costs, expenses, and attorneys' fees of Lender related thereto, the
     liability of Borrowers or Guarantors automatically shall be revived,
     reinstated, and restored and shall exist as though such Voidable Transfer
     had never been made.
 9.  Integration. This Agreement, together with the other Loan Documents,
     reflects the entire understanding of the parties with respect to the
     transactions contemplated hereby and shall not be contradicted or qualified
     by any other agreement, oral or written, before the date hereof.
 10. Parent as Lender for Borrowers. Each Borrower hereby irrevocably appoints
     Parent as the borrowing agent and attorney-in-fact for all Borrowers (the
     "Administrative Borrower"), which appointment shall remain in full force
     and effect unless and until Lender shall have received prior written notice
     signed by each Borrower that such appointment has been revoked and that
     another Borrower has been appointed Administrative Borrower. Each Borrower
     hereby irrevocably appoints and authorizes the Administrative Borrower (i)
     to provide Lender with all notices with respect to Advances and Letters of
     Credit obtained for the benefit of any Borrower and all other notices and
     instructions under this Agreement and (ii) to take such action as the
     Administrative Borrower deems appropriate on its behalf to obtain Advances
     and Letters of Credit and to exercise such other powers as are reasonably
     incidental thereto to carry out the purposes of this Agreement. It is
     understood that the handling of the Loan Account and Collateral of
     Borrowers in a combined fashion, as more fully set forth herein, is done
     solely as an accommodation to Borrowers in order to utilize the collective
     borrowing powers of Borrowers in the most efficient and economical manner
     and at their request, and that Lender shall not incur liability to any
     Borrower as a result hereof. Each Borrower expects to derive benefit,
     directly or indirectly, from the handling of the Loan Account and the
     Collateral in a combined fashion since the successful operation of each
     Borrower is dependent on the continued successful performance of the
     integrated group. To induce Lender to do so, and in consideration thereof,
     each Borrower hereby jointly and severally agrees to indemnify Lender
     harmless against any and all liability, expense, loss or claim of damage or
     injury, made against Lender by any Borrower or by any third party
     whosoever, arising from or incurred by reason of (a) the handling of the
     Loan Account and Collateral of Borrowers as herein provided, (b) Lender's
     relying on any instructions of the Administrative Borrower, or (c) any
     other action taken by Lender hereunder or under the other Loan Documents,
     except that Borrowers will have no liability to any Lender-Related Person
     under this Section 16.10 with respect to any liability that has been
     finally determined by a court of competent jurisdiction to have resulted
     solely from the gross negligence or willful misconduct of such
     Lender-Related Person.

[Signature pages to follow]

 

IN WITNESS WHEREOF

, the parties hereto have caused this Agreement to be executed and delivered as
of the date first above written.

BORROWERS: SYNALLOY CORPORATION

,

a Delaware corporation

By: /s/ Gregory M. Bowie

Title: Vice President, Finance

 

 

BRISTOL METALS, L.P.

,

a Tennessee limited partnership

By: /s/ Gregory M. Bowie

Title: Vice President, Finance

 

 

MANUFACTURERS CHEMICALS, L.P.

, a Tennessee limited partnership

By: /s/ Gregory M. Bowie

Title: Vice President, Finance

 

 

ORGANIC-PIGMENTS CORP.

,

a North Carolina corporation

By: /s/ Gregory M. Bowie

Title: Vice President, Finance

 

 

LENDER:

FOOTHILL CAPITAL CORPORATION,

a California corporation

By: /s/ Kathy R. Plisko

Senior Vice President

 

1. DEFINITIONS AND CONSTRUCTION. 1

1.1 Definitions 1

1.2 Accounting Terms 22

1.3 Code 22

1.4 Construction 22

1.5 Schedules and Exhibits 23

2. LOAN AND TERMS OF PAYMENT 23

2.1 Revolver Advances 23

2.2 [Intentionally Omitted.] 25

2.3 Borrowing Procedures and Settlements 25

2.4 Payments 25

2.5 [Intentionally Omitted.] 26

2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations
27

2.7 Cash Management 29

2.8 Crediting Payments 29

2.9 Designated Account 30

2.10 Maintenance of Loan Account; Statements of Obligations 30

2.11 Fees 30

2.12 Letters of Credit 31

2.13 LIBOR Option 33

2.14 Capital Requirements 35

2.15 Joint and Several Liability of Borrowers 36

3. CONDITIONS; TERM OF AGREEMENT 38

3.1 Conditions Precedent to the Initial Extension of Credit 38

3.2 Conditions Subsequent to the Initial Extension of Credit 42

3.3 Conditions Precedent to all Extensions of Credit 43

3.4 Term 43

3.5 Effect of Termination 44

3.6 Early Termination by Borrowers 44

4. CREATION OF SECURITY INTEREST 45

4.1 Grant of Security Interest 45

4.2 Negotiable Collateral and Chattel Paper 45

4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral 45

4.4 Delivery of Additional Documentation Required 46

4.5 Power of Attorney 46

4.6 Right to Inspect 47

4.7 Control Agreements 47

4.8 Commercial Tort Claims 47

5. REPRESENTATIONS AND WARRANTIES 47

5.1 No Encumbrances 48

5.2 Eligible Accounts 48

5.3 Eligible Inventory 48

5.4 [Intentionally omitted.] 48

5.5 Location of Inventory and Equipment 48

5.6 Inventory and Equipment Records 48

5.7 Location of Chief Executive Office; FEIN; Organization I.D. Number 48

5.8 Due Organization and Qualification; Subsidiaries 48

5.9 Due Authorization; No Conflict 49

5.10 Litigation 50

5.11 No Material Adverse Change 50

5.12 Fraudulent Transfer 51

5.13 Employee Benefits 51

5.14 Environmental Condition; Environmental Reports 51

5.15 Brokerage Fees 51

5.16 Intellectual Property 51

5.17 Leases 52

5.18 DDAs 52

5.19 Complete Disclosure 52

5.20 Indebtedness 52

5.21 Regulation U 52

5.22 Permits, Etc 52

5.23 Life Insurance Polices 53

6. AFFIRMATIVE COVENANTS 53

6.1 Accounting System 53

6.2 Collateral Reporting 53

6.3 Financial Statements, Reports, Certificates 54

6.4 Guarantor Reports 56

6.5 Returns and Allowances 57

6.6 Maintenance of Properties 57

6.7 Taxes 57

6.8 Insurance 57

6.9 Location of Inventory and Equipment 58

6.10 Compliance with Laws 58

6.11 Leases 59

6.12 Brokerage Commissions 59

6.13 Existence 59

6.14 Environmental 59

6.15 Disclosure Updates 59

6.16 Employee Benefits 60

7. NEGATIVE COVENANTS 60

7.1 Indebtedness 60

7.2 Liens 61

7.3 Restrictions on Fundamental Changes 61

7.4 Disposal of Assets 62

7.5 Change Name 62

7.6 Guarantee 62

7.7 Nature of Business 62

7.8 Prepayments and Amendments 62

7.9 Change of Control 62

7.10 Consignments 62

7.11 Distributions 62

7.12 Accounting Methods 63

7.13 Investments 63

7.14 Transactions with Affiliates 63

7.15 Suspension 63

7.16 Compensation 63

7.17 Use of Proceeds 63

7.18 Change in Location of Chief Executive Office; Inventory and Equipment with
Bailees 63

7.19 Securities Accounts 64

7.20 Financial Covenants 64

7.21 No Prohibited Transactions Under ERISA 66

7.22 Real Property 67

8. EVENTS OF DEFAULT 67

9. THE LENDER'S RIGHTS AND REMEDIES 69

9.1 Rights and Remedies 69

9.2 Remedies Cumulative 71

10. TAXES AND EXPENSES 72

11. WAIVERS; INDEMNIFICATION 72

11.1 Demand; Protest 72

11.2 Lender's Liability for Collateral 72

11.3 Indemnification 72

12. NOTICES 73

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 74

14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS 75

14.1 Assignments and Participations 75

14.2 Successors 77

14.3 Confidentiality 77

15. AMENDMENTS; WAIVERS 77

15.1 Amendments and Waivers 77

15.2 No Waivers; Cumulative Remedies 78

16. GENERAL PROVISIONS 78

16.1 Effectiveness 78

16.2 Section Headings 78

16.3 Interpretation 78

16.4 Severability of Provisions 78

16.5 Withholding Taxes 78

16.6 Amendments in Writing 79

16.7 Counterparts; Telefacsimile Execution 79

16.8 Revival and Reinstatement of Obligations 79

16.9 Integration 79

16.10 Parent as Lender for Borrowers 80

EXHIBITS AND SCHEDULES

Exhibit B-1 Form of Borrowing Base Certificate

Exhibit C-1 Form of Compliance Certificate

Exhibit L-1 Form of LIBOR Notice

Schedule A-1 Lender's Account

Schedule B-1 Designated Account and Designated Account Bank

Schedule C-1 Equipment Locations

Schedule C-2 Commercial Tort Claims

Schedule E-1 Eligible Inventory Locations

Schedule L-1 Life Insurance Policies

Schedule M-1 Material Contracts

Schedule P-1 Permitted Liens

Schedule 2.7(a) Cash Management Banks

Schedule 5.5 Locations of Inventory and Equipment

Schedule 5.7 Chief Executive Office; FEIN; Organizational I.D. Number

Schedule 5.8(b) Capitalization of Borrowers

Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries

Schedule 5.10 Litigation

Schedule 5.13 Employee Benefits/ERISA

Schedule 5.14 Environmental Matters

Schedule 5.16 Intellectual Property

Schedule 5.18 Demand Deposit Accounts

Schedule 5.20 Permitted Indebtedness

Schedule 7.19 Securities Accounts

 

 

Schedule A-1

Lender's Account

An account at a bank designated by Lender from time to time as the account into
which Borrowers shall make all payments to Lender under this Agreement and the
other Loan Documents; unless and until Lender notifies Borrowers to the
contrary, Lender's Account shall be that certain deposit account bearing account
number 323-266193 and maintained by Lender with The Chase Manhattan Bank, 4 New
York Plaza, 15th Floor, New York, New York 10004, ABA #021000021.

EXHIBIT C-1

(Form of Compliance Certificate)

 

[on Administrative Borrower's letterhead]

 

To: Foothill Capital Corporation

1000 Abernathy Road

Suite 1450

Atlanta, Georgia 30328

Attn: Business Finance Division Manager

 

Re: Compliance Certificate dated __________ ____, 200_

Ladies and Gentlemen:

Reference is made to that certain Loan and Security Agreement, dated as of July
26, 2002 (as from time to time amended, supplemented, restated, or otherwise
modified, the "Loan Agreement") among Synalloy Corporation, a Delaware
corporation ("Administrative Borrower"), and its subsidiaries signatory thereto
(together with the Administrative Borrower, each a "Borrower;" and,
collectively, "Borrowers"), and Foothill Capital Corporation, a California
corporation ("Lender"). Capitalized terms used in this Compliance Certificate
without definition shall have the meaning ascribed to such terms in the Loan
Agreement.

Pursuant to Section 6.3 of the Loan Agreement, the undersigned chief financial
officer of Administrative Borrower hereby certifies that:

1. The financial statements in Schedule 1 attached hereto, have been prepared in
accordance with GAAP (except for the lack of footnotes and year-end adjustments)
and fairly present in all material respects the financial condition of Borrowers
and their Subsidiaries.

2. The representations and warranties of Borrowers and of each Subsidiary of
Borrowers contained in the Loan Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of this certificate,
as though made on and as of this date (except to the extent that such
representations and warranties relate solely to an earlier date).

3. There does not exist any condition or event that constitutes a Default or
Event of Default, except for such conditions or events listed on Schedule 2
attached hereto, specifying the nature and period of existence thereof and what
action Borrowers have taken, are taking, or propose to take with respect
thereto.

4. Schedule 3 attached hereto demonstrates, in reasonable detail, compliance at
the end of the period referenced above with the applicable financial covenants
contained in Section 7.20 of the Loan Agreement.

 

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this _____ day of _______________, ________.

 

SYNALLOY CORPORATION,
a Delaware corporation, in its capacity as Administrative Borrower

 

 

By:

Name:

Title:

SCHEDULE 1

FINANCIAL STATEMENTS

(See Attached)

SCHEDULE 2

DEFAULTS AND EVENTS OF DEFAULT

 

SCHEDULE 3

COVENANT COMPLIANCE

1. Minimum EBITDA.

Borrowers' EBITDA for the fiscal month ending _________, ________ is
$______________, which amount [is/is not] greater than or equal to the amount
set forth in Section 7.20(a)(i) of the Loan Agreement for the corresponding
period.

2. Minimum Tangible Net Worth.

Borrowers' Tangible Net Worth for the fiscal month ending _________, ________ is
$______________, which amount [is/is not] greater than or equal to the amount
set forth in Section 7.20(a)(ii) of the Loan Agreement for the corresponding
period.

3. Minimum Excess Availability.

Borrowers' Excess Availability as of ________________ is $______________, which
amount [is/is not] greater than or equal to the amount set forth in Section
7.20(a)(iii) of the Loan Agreement for such date.

4. Minimum Equipment Value.

No material change has occurred in the appraised value of Borrowers' Equipment
since the date of the last appraisal of such Equipment delivered to Lender.

5. Maximum Capital Expenditures.

(a) The aggregate amount of capital expenditures made to date in the current
fiscal year is $________________.

(b) The aggregate amount set forth above [is/is not] less than or equal to the
amount set forth in Section 7.20(b) of the Loan Agreement for the corresponding
period.

 

EXHIBIT L-1

 

FORM OF LIBOR NOTICE

Foothill Capital Corporation
1000 Abernathy Road
Suite 1450
Atlanta, Georgia 30328
Attention:

Ladies and Gentlemen:

Reference hereby is made to that certain Loan and Security Agreement, dated as
of July 26 2002 (the "Loan Agreement"), by and among Synalloy Corporation, a
Delaware Corporation ("Administrative Borrower") and its subsidiaries signatory
thereto (together with Administrative Borrower, each a "Borrower;" and,
collectively, "Borrowers"), and Foothill Capital Corporation, a California
corporation ("Lender"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement.

This LIBOR Notice represents Borrowers' request to elect the LIBOR Option with
respect to outstanding Advances in the amount of $ (the "LIBOR Rate Advance")[,
and is a written confirmation of the telephonic notice of such election given to
Lender].

Such LIBOR Rate Advance will have an Interest Period of [1, 2, or 3] month(s)
commencing on .

This LIBOR Notice further confirms Borrowers' acceptance, for purposes of
determining the rate of interest based on the LIBOR Rate under the Loan
Agreement, of the LIBOR Rate as determined pursuant to the Loan Agreement.

Each Borrower represents and warrants that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document, any
agreement, instrument, certificate, document or other writing furnished at any
time under or in connection with any Loan Document, and as of the effective date
of any advance, continuation or conversion requested above is true and correct
in all material respects (except to the extent any representation or warranty
expressly related to an earlier date), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), and (iii)
no Default or Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the request above.

Dated:

SYNALLOY CORPORATION, a Delaware corporation, in its capacity as Administrative
Borrower

By
Name:
Title:

Acknowledged by:

FOOTHILL CAPITAL CORPORATION

By:
Name:
Title:

 

 

 

SCHEDULE A-1

Lender's Account

SCHEDULE B-1

Designated Account and Designated Bank Account

Wachovia Bank, N.A.

aba 05-3100494

Account Name: Synalloy Corporation

Account Number: 1861-019-730

SCHEDULE C-1

Equipment Locations

 

 1. Bristol Metals, L.P.

    390 Bristol Road

    Bristol, TN 37620

 2. Manufacturers Chemicals, L.P.

4325 Old Tasso Road

Cleveland, TN 37312

SCHEDULE C-2

Commercial Tort Claims

[None.]

SCHEDULE E-1

Eligible Inventory Locations

1. Synalloy Corporation Spartanburg County

Post Office Box 5627 2155 West Croft Circle

Spartanburg, SC 29304 Spartanburg, SC 29302

2. Bristol Metals, L.P. Sullivan County

Post Office Box 1589 390 Bristol Road

Bristol, TN 37621 Bristol, TN 37620

3. Manufacturers Chemicals, L. P. Bradley County

Post Office Box 2788 4325 Old Tasso Road

Cleveland, TN 37320-2788 Cleveland, TN 37312

Manufacturers Chemicals, L.P. Whitfield County

1330 Coronet Drive 1330 Coronet Drive

Dalton, GA 30720 Dalton, GA 30720

4. Organic-Pigments Corp. Guilford County

Post Office Box 2667 209 King Street

Greensboro, NC 27402 Greensboro, NC 27406

 

SCHEDULE L-1

 

Life Insurance Policies

Cash Surrender

Insurer

Policy Number Insured Value

General American 1821425 Benjamin M. Smith $423,014.99

General American 1820009 Robert Stockwell Davies $472,696.94

General American 1820007 Donald Ray Bain $316,011.03

General American 1820005 Porter Clarke Blackman $248,180.43

General American 1820003 Erwin Collins Thornton $407,957.76

General American 1820001 William Armstrong Coleman $439,029.20

SCHEDULE M-1

Material Contracts

Ciba Specialty Chemicals Corporation, dated January 30, 1998, with Synalloy
Corporation.

Ondeo Nalco Energy Services, L.P., dated November 1, 2001, with Synalloy
Corporation.

Sumitomo Chemical Company, Limited; Sumitomo Corporation and Summit Specialty
Chemicals Corporation ("Sumitomo"), dated April 1, 2002, with Synalloy
Corporation.

SCHEDULE P-1

Permitted Liens

[To come from Paul Hastings.]

 

 

 

SCHEDULE 2.7(a)

Cash Management Banks

.

Wachovia Bank, N.A.

Corporate Banking Department

101 North Pine Street

P. O. Box 5707

Spartanburg, SC 29304

 

 

SCHEDULE 5.5

Locations of Inventory and Equipment

 

1. Synalloy Corporation Spartanburg County

Post Office Box 5627 2155 West Croft Circle

Spartanburg, SC 29304 Spartanburg, SC 29302

 

2. Bristol Metals, L.P. Sullivan County

Post Office Box 1589 390 Bristol Road

Bristol, TN 37621 Bristol, TN 37620

3. Manufacturers Chemicals, L. P. Bradley County

Post Office Box 2788 4325 Old Tasso Road

Cleveland, TN 37320-2788 Cleveland, TN 37312

Manufacturers Chemicals, L.P. Whitfield County

1330 Coronet Drive 1330 Coronet Drive

Dalton, GA 30720 Dalton, GA 30720

4. Organic-Pigments Corp. Guilford County

Post Office Box 2667 209 King Street

Greensboro, NC 27402 Greensboro, NC 27406

Consigned Inventory

Location Ownership

Springs Industries Organic-Pigments Corp.

294 Grace Avenue

Lancaster, SC 29720

Zeres Coatings Organic-Pigments Corp.

2018 Cleanwater Circle

Bowling Green, OH 43402

Trichromatic West Organic-Pigments Corp.

6060 Rickenbacker Road

Commerce, CA 90040

Springs Industries Synalloy Corporation

294 Grace Avenue

Lancaster, SC 29720

Cranston Print Works Co. Synalloy Corporation

2 Worchester Road

Webster, MA 01570

Sidney Springer Co. Synalloy Corporation

1019 East 4th Place

Los Angeles, CA 90021

MF&H Textiles, Inc. Synalloy Corporation

Hwy. 96 West

Butler, GA 31006-1970

Russell Corporation Synalloy Corporation

755 Lee Street

Alexander City, AL 35010

 

SCHEDULE 5.7

Chief Executive Office; FEIN; Organizational ID Num

ber

 

FEIN/Organizational

Company

Chief Executive Office

ID Number

Borrowers:

Synalloy Corporation 2155 West Croft Circle 57-0426694/2154910

Spartanburg, SC 29302

Bristol Metals, L.P. 390 Bristol Road 58-2245237/0314787

Bristol, TN 37620

Manufacturers Chemicals, L.P. 4325 Old Tasso Road 62-1667469/0322764

Cleveland, TN 37312

Organic-Pigments Corp. 209 King Street 56-1081069/0108315

Greensboro, NC 27406

Guarantors:

Whiting Metals, Inc. 2155 West Croft Circle 57-0403347/N/A

Spartanburg, SC 29302

Synalloy Metals, Inc. 390 Bristol Road 59-1036236/0257963

Bristol, TN 37620

Manufacturers Soap & Chemical 4325 Old Tasso Road 62-0280180/0019707

Co. Cleveland, TN 37312

Metchem, Inc. 900 Market Street 51-0373317/2593010

Wilmington, DE 19801

Delmet, Inc. 900 Market Street 51-0375887/2636889

Wilmington, DE 19801

FEIN/Organizational

Company

Chief Executive Office

ID Number

 

Delsoap, Inc. 900 Market Street 52-2008268/2694198

Wilmington, DE 19801

Synco International, Inc. P. O. Box 12150 66-0521434

St. Thomas, V.I. 00801

 

 

SCHEDULE 5.8(b)

Capitalization of Borrowers

Authorized Company Issued and

Company

Stock

Outstanding

Synalloy Corporation Common Stock, $1 par value Issued - 8,000,000

12,000,000 shares authorized Outstanding -

5,964,304

Organic-Pigments Corp. Common Stock, $10 par value 70

10,000 shares authorized

Bristol Metals, L.P. 1,000 Units 100 Units

 

Manufacturers Chemicals, L.P. 1,000 Units 100 Units

 

Synalloy Corporation has issued rights pursuant to a Rights Agreement dated as
of February 4, 1999, between the Company and America Stock Transfer and Trust
Company, as amended, May 3, 1999 and May 22, 2000, which upon the occurrence of
certain events will entitle the holder of each share of common stock the right
to purchase 2/10ths of one share of Common Stock. The rights presently are not
exercisable and trade with the Common Stock.

Synalloy Corporation has authorized the granting of options to purchase up to
809,000 shares of its Common Stock. Of this total, 607,000 have been granted of
which as of July 1, 2002, 298,200 are currently exercisable. These options have
been granted to certain key employees and directors of the Company. Reference is
made to the plans which are Exhibits 10.1, 10.2 and 10.3 to the 2001 Form 10-K
of Synalloy corporation.

 

 

SCHEDULE 5.8(c)

Capitalization of Borrowers' Subsidiaries

Organizational Authorized Outstanding

Subsidiary

Jurisdiction Capital Shares Owner

Whiting Metals, Inc. S. Carolina 100 78 Synalloy Corp.

(Non-active)

Synalloy Metals, Inc. Tennessee 100 100 Synalloy Corp.

Manufacturers Soap &

Chemical, Co. Tennessee 5,000 1,500 Synalloy Corp.

Synco International Virgin Islands 1,000 1,000 Synalloy Corp.

Metchem, Inc. Delaware 3,000 100 Synalloy Corp.

Delmet, Inc. Delaware 3,000 100 Synalloy Metals,

Inc.

Delsoap, Inc. Delaware 3,000 100 Manufacturers Soap

& Chemical

Company

Organic-Pigments Corp. N. Carolina 10,000 70 Synalloy Corp.

 

SCHEDULE 5.10

Litigation

Pending

.

Joseph N. Avento v. Synalloy Corporation and Bristol Metals, L.P.

, Chancery Court for Sullivan County, Tennessee, Case No. B0018185(M). This is
an action brought by the former President of Bristol Metals, L.P. alleging that
he was wrongfully terminated because of his age. The Company believes that the
claims are without merit based on many factors, including the fact that he was
not terminated, but voluntarily resigned.

On April 24, 2002, the defendants filed a Motion for Summary Judgment. On May 1,
2002, counsel for the Plaintiff filed a motion to withdraw which was granted by
the Court. Mr. Avento was given until June 14, 2002 to retain new counsel and
until July 15, 2002 to respond to the Motion for Summary Judgment. Neither
action has been taken by Mr. Avento to date. The defendants have renewed their
Motion for Summary Judgment.

Threatened

.

a. Bristol Metals, L.P. has received a claim that could total over a million
dollars in damages from a subcontractor related to alleged leaks near a hotel
swimming pool. The subcontractor claims that material failure in Synalloy pipe
contributed to the leaks. The claim is in the first stages of investigation.
However, it appears that there are substantial issues of material selection and
installation that would not be the responsibility of Synalloy and its
subsidiaries. In addition, the claim has been submitted to Synalloy's carrier
and if the pipe was defective, all or portion of the claim may be covered by
insurance.

 

 

SCHEDULE 5.13

Employee Benefits/ERISA

 

Synalloy Corporation 401(k) Employee Stock Ownership Plan

Bristol Metals, L.P. Pension Plan A

Bristol Metals, L.P. Pension Plan B

Medical Benefits for Employees of Synalloy Corporation

LTD Benefits for Employees of Synalloy Corporation

 

SCHEDULE 5.14

Environmental Matters

.

 

Prior to 1987, Parent utilized certain products at its chemical facilities that
are currently classified as hazardous waste. Environmental investigation,
including testing of the groundwater in the area of treatment impoundments,
disclosed the presence of certain contaminants and identified several solid
waste management units.

Borrowers have supplied Lender with the reports/information as follows:

Spartanburg, S.C. Facility

Documents Provided:

Summary of: Corrective Measures Study Report (Kubal-Fair & Associates, March
2000).

Approval for Closure Design (DHEC letter, December 27, 2001).

Summary of: Closure Design - Corrective Action Management Unit (Kubal-Fair &
Associates, April 2002).

Cost Estimates for:

A. Off-Site Disposal - SWMU 9, 26 and Bldg. 8

B. Remedial and Post-Closure Care Cost Estimate

C. CAMU Activities

Information provided:

In connection with the issuance of a 1989 post-closure care hazardous waste
permit, soil and groundwater contamination was identified in the area of
numerous solid waste management units and other areas of concern. By letter
dated December 27, 2001, Parent received approval to excavate waste and impacted
soil from six (6) inactive solid waste management units and to consolidate
excavated materials from these inactive units at an on-site correct action
management unit (located at the site of three additional inactive solid waste
management units). This majority of the work is expected to be performed in
2002, but will not be completed until 2003. The existing pump-and-treat system
treating contaminated groundwater will remain in operation for the foreseeable
future. In addition, Parent anticipates closing three other solid waste
management units and conducting an environmental investigation of potential
leaks from on-site sewer lines that are to be replaced.

Parent reported a special charge of $560,000 in 2000, and had a reserve of
$1,304,000 as of December 29, 2001 to account for additional estimated future
costs.

Augusta, GA Facility

Documents provided:

Summary of: Revised Closure and Post-Closure Care Plan - Surface Impoundment/
Equalization Basin (Kubal-Fair & Associates, December 2001).

Approval of Closure Plan (Georgia Dept. of Natural Resources letter, May 2,
2002).

Cost Estimate: "Remediation and Post-Closure Care Cost Estimates" [Note: Even
though the Corrective Measures Study has not been submitted, estimates for
remaining solid waste management unit remediation was included.]

Information provided:

Operations at this facility were discontinued in 2001. Pursuant to a
post-closure care hazardous waste permit and consent order, Parent received
approval to close-in-place two former waste water surface impoundments. In
addition, Parent anticipates conducting additional soil investigations and
disposing of any impacted surface soils in an off-site, non-hazardous waste
landfill. Parent intends to request approval to discontinue a pump-and-treat
system that has been treating contaminated groundwater since the 1980s.

Parent reported a special charge of $1,148,000 in 2000, and had a reserve of
$1,398,000 as of December 29, 2001 to account for additional estimated future
costs.

Bristol Metals, L.P.

Documents Provided:

SWMU 35 Ground Water Sampling Data (GeoSolutions, Inc., February 5, 2002).

Supplemental SWMU 35 Ground Water Sampling Data [Note: SWMU 35 is the last
remaining solid waste management unit to be addressed.]

Cost Estimate: "Remediation and Post-Closure Care Cost Estimate."

Information Provided:

Soil and groundwater contamination with various metals was detected in the area
of numerous solid waste management units on the property. The governing
regulatory agency has approved the remediation of contaminated soil, and an
existing pump-and-treat system to treat contaminated groundwater is expected to
remain operational for the foreseeable future. Contaminated groundwater has
migrated off-site, but due to continued operation of the groundwater treatment
and containment system, further migration to the nearest drinking water well is
not expected.

Bristol Metals, L.P. had a reserve of $83,000 to account for additional
estimated future costs.

Superfund Site Matters

Aqua-Tech PRP Litigation: Notice of Dismissal (C.A. # 6:95-1304-3, US Dt. Ct.,
Dist. of S.C., September 11, 1995).

Caldwell Systems, Inc. Site, Lenoir, N.C.: Administrative Order of Consent for
De Minimus Settlement (March 19, 1999).

Stoller Chemical Co. Site: PRP Group Memorandum of Agreement (Ravenel Site
Group, unsigned and undated, with a cover letter dated March 19, 2002) addressed
to Parent indicates that PRP liability was settled with the regulatory agency
for $50,000 (representing a 1.4% share) unless and until total remedial expenses
exceed $14 million.

M.J. Solvents Co. Site: PRP Notice Letter (Georgia Dept. of Natural Resources,
December 14, 2001) addressed to Organic-Pigments Corp. Organic-Pigments Corp.
disposed of only 4-5 drums at the site. Future remediation costs and
Organic-Pigments Corp.'s allocated share are presently unknown.

Four County Landfill, Delsy, Indiana: (A) McBride Baker & Coles letter (March
31, 1993) addressed to Bristol Metals, L.P. [Note: describes terms of de minimis
settlement] and (B) PRP Notice (Indiana Dept. of Environmental Management, April
3, 2002) of additional remedial activities beyond the scope of those activities
conducted previously pursuant to prior settlement agreements. Additional
remedial costs are expected to be between $800,000 and $1,000,000.

Stoller Chemical/Pelham Phosphates Works Site: United States Department of
Justice letter (April 22, 2002) proposing that Parent pay $117,200 to settle its
PRP liability.

Carolina Steel Drum Site: PRP Notice (United States Environmental Protection
Agency, January 31, 2002) addressed to Parent as one of twenty-seven (27) PRPs
identified to date. Remedial costs incurred to date by United States
Environmental Protection Agency are $6,242,500. No volumetric share analysis has
been provided at this time.

 

 

SCHEDULE 5.16

Intellectual Property

Brismet, Ser. 72-014, 052, Reg. No. 643, 152, filed August 16, 1956, renewed
March 26, 1997. Current owner - Bristol Metals, L.P.

Bucron, Ser. 72-379456, Reg. No. 939, 370, filed December 23, 1970. Current
owner - Synalloy Corporation. (Note: Expires August 1, 2002 and Synalloy does
not intend to renew.)

BU, Ser. 72-097449, Reg. No. 711, 690. Current owner - Synalloy Corporation
d/b/a Blackman-Uhler Chemical Company, renewed February 28, 2001.

Acqua-Hue, Ser. No. 72-062, 905, Reg. No. 716,307. Current owner - Synalloy
Corporation d/b/a Blackman-Uhler Chemical Company, renewed February 28, 2001.

Brismet.com, registered February 13, 1998. Current owner - Synalloy Corporation.

 

 

 

SCHEDULE 5.18

Demand Deposit Accounts

Bank

Account Number Company

Wachovia 1861-019-730 Synalloy

Wachovia 1861-086-381 Synalloy

Wachovia 1869-086-382 Synalloy

Wachovia 1867-047-933 Organic-Pigment

Wachovia 3207-78806 Synalloy

First Tennessee National 00002566801 Manufacturers Chemical

AmSouth 0000005223 Bristol Metals

Columbus Bank and Trust 000-224-208-7 Synalloy

First Union 2000900270420 Metchem

Delaware Trust Capital

Management 6728017528-1078286 Metchem

 

SCHEDULE 5.20

Permitted Indebtedness

Deferred Compensation as described in Note J to the Consolidated Financial
Statements of Borrower for year ending December 29, 2001.

Premium Finance Agreement with AFCO Premium Credit, LLC dated December 19, 2001.

Loan Agreement dated as of March 12, 1996 between Synalloy Corporation and
Metchem, Inc.

Loan Agreement dated as of July 1, 1998 between Organic-Pigments Corp. and
Metchem, Inc.

Loan Agreement dated as of March 12, 1996 between Bristol Metals, L.P., as the
successor-in-interest to Bristol Metals, Inc. and Metchem, Inc.

Loan Agreement dated as of August 9, 1999 between Manufacturers Chemicals, L.P.
and Metchem, Inc.

 

 

SCHEDULE 7.19

Securities Accounts

Synalloy Corporation account with Banc of America Investment Services, Inc.

Account No. RS3-750565

Metchem, Inc. account with Scott & Stringfellow, Inc.

Account No. 52038841-RR12