EXHIBIT 2

                           COMMERCIAL LOAN AGREEMENT

         This Agreement (the "Agreement") is entered into this 20th of December,
1999 by and between First International Bank (the "Lender"), and Smith-Midland
Corporation (the "Borrower").

         Borrower's request for Lender to extend to them a loan in the amount of
$500,000.00 (the "Loan") has been approved subject to the following provisions:

I. GENERAL REQUIREMENTS:

       A. The Borrower shall execute all instruments and agreements as Lender
          may require in order to properly document the Loan.

       B. All Loan documentation shall be on terms and conditions fully
          satisfactory to Lender and Lender's legal counsel.

II. THIS AGREEMENT IS SUBJECT TO:

       A. Receipt by Lender of evidence that there has been no unremedied
          adverse change since the date of the Borrower's application to the
          Lender for the Loan (the "Application"), or since any preceding
          disbursements, in the financial or any other condition of Borrower,
          which would warrant withholding or not making any disbursement.

       B. The representations made by Borrower in its Application, the
          requirements or conditions set forth in the Application, including the
          supporting documents thereto, the conditions set forth herein and any
          future conditions imposed by Lender, if applicable.

III. TERMS OF LOAN:

       A. Commercial Promissory Note. The Loan shall be evidenced by a
          Commercial Term Promissory Note (the "Note") executed by the Borrower
          to the order of the Lender upon the closing of the Loan, in the
          original principal amount of $500,000.00.

       B. Interest; Payments. The Note shall provide for the payment of
          principal and interest upon the following terms:

          The Borrower will pay principal and interest by making monthly
          payments in the initial amount of $10,685.13 commencing on February 1,
          2000, and continuing on the first day of each and every month
          thereafter until all principal and interest and any other sums due
          under the Loan shall have been paid in full. Notwithstanding the
          foregoing, the entire indebtedness evidenced by the Note, including,
          but not


<PAGE>


          limited to, all outstanding principal and accrued and unpaid interest,
          shall be due and payable in full on the Fifth anniversary date of the
          Note.

          The Borrower's initial monthly payments have been calculated in
          accordance with the full amortization of the Loan by level monthly
          payments of principal and interest over a Five (5) year period at the
          interest rate applicable on the date hereof.

          The Borrower's initial monthly payments have been calculated in
          accordance with the full amortization of the Loan by level monthly
          payments of principal and interest over a Five (5) year period at the
          interest rate applicable on the date hereof.

          Interest under the Loan will be charged in arrears on the unpaid
          principal of the Note until the full amount of principal thereunder
          has been paid. Interest shall be computed and payable monthly on the
          basis of a three hundred sixty (360) day year and actual days elapsed.
          Interest shall accrue on the outstanding principal amount of the Note
          at a variable rate per annum of one and three quarters (1.75)
          percentage points in excess of the Prime Rate, with the term "Prime
          Rate" meaning the "Prime Rate" as published from time to time in the
          "Money Rates" section of the Wall Street Journal, or in the event that
          such rate is no longer published in the Wall Street Journal, a
          comparable index or reference rate selected by the Lender or other
          holder, in its sole discretions. The initial interest rate hereunder
          is ten and one quarters percent (10.25%).

          Upon the occurrence of an event of default under the Loan, without in
          any way affecting the Lender's or other holder's right to accelerate
          the Loan, the Loan shall bear interest at a rate which is two
          percentage points (2.0%) per annum greater than the rate otherwise in
          effect under the Loan.

          In the event Borrower fails to pay any installment of principal and/or
          interest within ten (10) days of when it is due and payable, without
          in any way affecting the Lender's or other holder's right to
          accelerate the Loan, a late charge equal to five (5) percent of such
          late payment shall, at the option of the Lender or other holder, be
          assessed against the Borrower.

          The Borrower agrees to pay all reasonable costs, expenses and
          reasonable attorneys' and other reasonable professionals' fees
          incurred in any action to collect and/or enforce the Note or to
          enforce, protect, preserve, defend, realize upon or foreclose any
          security agreement, mortgage or other agreement, including this
          Agreement, securing or relating to the Note, including without
          limitation, all reasonable costs and expenses incurred in inspecting
          or surveying mortgaged real estate, if any, or conducting
          environmental studies or tests, or to enforce, protect, preserve,
          defend or sustain the lien of said security agreement, mortgage or
          other agreement or in any litigation or controversy arising from or
          connected in any manner with said security agreement, mortgage or
          other agreement, or the Note. Borrower further agrees to pay all
          reasonable costs, expenses and reasonable attorneys' and other
          reasonable professionals' fees incurred by the Lender or any other
          holder in connection with any


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<PAGE>


          "workout" or default resolution negotiations involving legal counsel
          or other professionals and further in connection with any
          re-negotiation or restructuring of the indebtedness evidenced by the
          Note. Any such costs, expenses and/or fees remaining unpaid after
          demand therefor, may, at the discretion of the Lender or any other
          holder, be added to the principal amount of the indebtedness evidenced
          by the Note.

          All payments shall be made to the Lender at its office at 280 Trumbull
          Street, Hartford, Connecticut 06103, or at a different place if
          required by Lender or other holder.

          All payments received by the Lender, at the option of the Lender,
          shall be applied first to any outstanding charges and expenses
          incurred by the Lender in connection with the Note or any documents
          executed in connection with the Note, then to any unpaid and accrued
          interest and finally to the outstanding principal due under the Note.
          The Borrower agrees that the interest shall accrue at the foregoing
          rate on the unpaid balance before and after maturity, by acceleration
          or otherwise.

          The Borrower may prepay the Loan in part or in full at any time,
          however, there will be a prepayment penalty as follows: 3% of the
          principal prepayment amount in year 1, 2% of the principal prepayment
          amount in year 2 and 1% of the principal prepayment amount in year 3.
          Thereafter, the Loan may be prepaid in part or in full, at any time,
          without penalty or premium upon 21 days prior written notice to
          Lender. Failing such prior notice, the Borrower shall pay to Lender a
          prepayment penalty equal to 21 days interest on the principal amount
          prepaid. Any amounts prepaid shall be applied first to interest and
          other charges accrued in connection with the Loan to the date of
          prepayment and then to principal. Notwithstanding the above, the
          prepayment penalty shall not be assessed on prepayments required by
          the Lender from the proceeds of any casualty insurance, condemnation
          proceeds or the proceeds of any life insurance policy.

       C. Use of Proceeds of Loan:

          1.   Approximately $100,000.00 to construct interior tenant
               improvements of a new office building.

          2.   Approximately $400,000.00 to pay down the current revolving line
               of credit with Lender.

       D. Collateral:

          1.   A blanket lien on the business assets of the Borrower.


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<PAGE>

     IV.  CONDITIONS PRECEDENT TO CLOSING:

     The Borrower must fulfill the following conditions precedent before or
concurrently with the closing of the Loan:

     A.   The Lender shall have received all duly executed documentation which
          governs, secures and/or evidences the Loan as may be required by, and
          upon terms and conditions fully satisfactory to, the Lender and its
          legal counsel (collectively, the "Financing Agreements"). Said
          Financing Agreements include, without limitation, the following:

          1.     This Agreement.

          2.     Note drawn to the Lender's order in the form of Exhibit A
                 attached hereto.

          3.     Security Agreement (the "Security Agreement") covering all
                 business assets of the Borrower.

          4.     UCC-1 Financing Statements for each jurisdiction that may be
                 necessary or that the Lender deems desirable in order to
                 perfect and protect the security interests granted under the
                 Security Agreement.

          5.     UCC-3 Termination Statements for each jurisdiction that may be
                 necessary or that the Lender may deem desirable in order to
                 terminate the liens and security interests in favor of any
                 creditors.

          6.     Certified copies of all corporate action (in form and substance
                 satisfactory to the Lender) taken by the Borrower to authorize
                 the execution, delivery and performance of this Agreement, the
                 Note and the other Financing Agreements, and the borrowings to
                 made hereunder or thereunder, together with such other papers
                 as the Lender or its counsel may require.

     B.   The Lender shall have received evidence satisfactory to it of hazard
          insurance for the benefit of the Lender regarding the business assets
          which are collateral for the Loan. Hazard policies regarding business
          assets must name the Lender as Loss Payee. Combined or blanket
          policies must name the Lender as Loss Payee. Copies of the mortgagee
          or loss payee endorsements shall have been provided to Lender. The
          insurance certificate must provide for ten (10) days notice to Lender
          prior to cancellation. If any business premises of the Borrower are
          located in a designated flood zone, federal flood insurance is
          required. Flood insurance premiums shall be current as of closing and
          escrowed by the Lender going forward.

          All such insurance shall be written by a company or companies
          acceptable to the Lender, and licensed to do business in Virginia.
          Such policies of insurance shall be satisfactory to the Lender as to
          form, substance and amount. All such policies shall


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<PAGE>

          be in an amount sufficient to prevent the Borrower from becoming a
          co-Insurer thereunder.

     C.   The Lender shall have received an opinion of counsel to the Borrower
          that the Borrower is duly organized, formed and/or incorporated, and
          in good standing under the laws of the state of incorporation or
          organization; have due corporate or membership and legal authority and
          power to borrow or guaranty in accordance with the Financing
          Agreements; that all Financing Agreements have been validly
          authorized, executed and delivered; and that the Financing Agreements,
          once delivered, recorded and filed, will be enforceable against the
          Borrower in accordance with the terms thereof, and that such Financing
          Agreements will not violate or be in conflict with or constitute a
          default under any other contractual or judicial obligations, or be in
          conflict with the organizational documents or any other agreement of
          Borrower; and that there are no outstanding or threatened litigation,
          contingent liabilities, administrative, or other proceedings, the
          outcome of which could materially and adversely affect the collateral,
          or the ability of the Borrower to perform its obligations under the
          Financing Agreements.

     D.   Lender shall be in receipt of satisfactory evidence that all
          applicable taxes have been paid by Borrower.

V.   FINANCIAL COVENANTS:

     The Borrower hereby agrees and covenants that, for the term of the Loan:

     A.   The Borrower shall not assume, guarantee, endorse or otherwise become
          liable upon the obligations of any person or entity.

     B.   Borrower agrees that it will not authorize or issue additional shares
          of its capital stock, or sell, transfer, or redeem any of its
          outstanding shares of corporate stock without the prior written
          consent of Lender.

VI.  EVENTS OF DEFAULT AND REMEDIES:

     A.   The occurrence of any of the following conditions or events shall
          constitute a default (an "Event of Default") under this Agreement:

          1.     any failure by the Borrower to pay as and when due and payable
                 any interest on or principal of or other sum payable under the
                 Note which default is not cured 15 days from the date such sums
                 were due time being strictly of the essence; or

          2.     any failure by the Borrower to pay as and when due and payable
                 any other sums to be paid by the Borrower to the Lender under
                 this Agreement which

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<PAGE>

                 default is not cured within 15 days from the date such sums
                 were due time being strictly of the essence; or

          3.     title to any collateral granted to secure the Loan is or
                 becomes unsatisfactory to the Lender by reason of any lien,
                 charge, encumbrance, title condition or exception (including
                 without limitation, any mechanic's, materialman's or similar
                 statutory or common law lien or notice thereof), and such
                 matter causing title to be or become unsatisfactory is not
                 cured or removed (including by bonding) within twenty (20) days
                 after notice thereof from the Lender to the Borrower; or

          4.     any failure by the Borrower to duly observe or perform any
                 term, covenant, condition or agreement contained in this
                 Agreement or in any of the other Financing Agreements which
                 failure continues after any applicable notice on grace periods;
                 or

          5.     any representation or warranty made or deemed to be made by or
                 on behalf of the Borrower in this Agreement or in any of the
                 other Financing Agreements, or in any report, certificate,
                 financial statement, document or other instrument delivered
                 pursuant to or in connection with this Agreement or any of the
                 other Financing Agreements, shall prove to have been false or
                 incorrect in any material respect upon the date of when made
                 or deemed to be made or repeated; or

          6.     any dissolution, termination, partial or complete liquidation,
                 merger or consolidation, or insolvency of the Borrower, or any
                 sale, transfer or other disposition of all or substantially all
                 of the assets of the Borrower, other than as permitted under
                 the terms of this Agreement; or

          7.     any suit or proceeding shall be filed against the Borrower
                 which, if adversely determined, would have a materially adverse
                 affect on the ability of the Borrower to perform each and every
                 one of its obligations under and by virtue of this Agreement
                 and the other Financing Agreements, for which a bond has not
                 been provided by the Borrower to the satisfaction of the Lender
                 within ten (10) business days of the filing of any such suit or
                 proceeding; or

          8.     any change in the legal or beneficial ownership of the
                 Borrower; or

          9.     any failure by the Borrower to pay at maturity, or within any
                 applicable period of grace, any obligation for borrowed money
                 or credit received, or any failure to observe or perform any
                 material term, covenant or agreement contained in any agreement
                 by which it is bound, evidencing or securing borrowed money or
                 credit received for such period of time as would permit
                 (assuming the giving of appropriate notice if required) the
                 holder or holders

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<PAGE>

                 thereof or any obligations issued thereunder to accelerate the
                 maturity thereof; or

          10.    the Borrower shall file a voluntary petition in bankruptcy
                 under Title 11 of the United States Code, or an order for
                 relief shall be issued against the Borrower in any involuntary
                 petition in bankruptcy under Title 11 of the United States
                 Code, or the Borrower shall file any petition or answer seeking
                 or acquiescing in any reorganization, arrangement, composition,
                 readjustment, liquidation, dissolution or similar relief for
                 itself under any present or future federal, state or other law
                 or regulation relating to bankruptcy, insolvency or other
                 relief of debtors, or the Borrower shall seek or consent to or
                 acquiesce in the appointment of any custodian, trustee,
                 receiver, conservator or liquidator of the Borrower, or of all
                 or any substantial part of its respective property, or the
                 Borrower shall make an assignment for the benefit of creditors,
                 or the Borrower shall fail generally to pay its debts as such
                 debts become due, or the Borrower shall give notice to any
                 Governmental Authority or body of insolvency or pending
                 insolvency or suspension of operations; or

          11.    a court of competent jurisdiction shall enter any order,
                 judgment or decree approving a petition filed against the
                 Borrower seeking any reorganization, arrangement, composition,
                 readjustment, liquidation or similar relief under any present
                 or future Federal, state or other law or regulation relating to
                 bankruptcy, insolvency or other relief for debtors, or
                 appointing any custodian, trustee, receiver, conservator or
                 liquidator of all or any substantial part of its property or;

          12.    any uninsured final judgment in excess of $25,000 shall be
                 rendered against the Borrower and shall remain in force,
                 undischarged, unsatisfied and unstayed, for more than thirty
                 (30) days, whether or not consecutive or;

          13.    service of process is made upon the Lender seeking to attach or
                 garnish by mesne or trustee process any funds of Borrower which
                 are on deposit with the Lender; or

          14.    any of the Financing Agreements shall be canceled, terminated,
                 revoked or rescinded otherwise than in accordance with the
                 terms thereof or with the express prior approval of the Lender,
                 or any action at law, suit in equity or other legal proceeding
                 to cancel, revoke or rescind any of the Financing Agreements
                 shall be commenced by or on behalf of the Borrower which is a
                 party thereto or any of their respective members, managers,
                 stockholders, officers, directors, partners or beneficiaries,
                 or any court or any other governmental or regulatory authority
                 or agency of competent jurisdiction shall make a determination
                 that, or issue a judgment, order, decree or ruling


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<PAGE>

                 to the effect that, any one or more of the Financing Agreements
                 is illegal, invalid or unenforceable in accordance with the
                 terms thereof; or

          15.    the Borrower shall be indicted for a federal crime, a
                 punishment for which could include the forfeiture of any of its
                 assets; or

          16.    there shall be any material adverse change in the assets,
                 liabilities, condition (financial, operating or otherwise) or
                 business of the Borrower; or

          17.    if, at any time, the Lender believes in good faith that the
                 prospect of payment of any obligation or the performance of any
                 agreement of the Borrower is impaired, or there is such a
                 change in the assets, liabilities, condition (financial,
                 operating or otherwise) or business of the Borrower as the
                 Lender believes in good faith increases its risk of
                 non-collection; or

          18.    any "default" or any "Event of Default", as those terms may be
                 defined in any of the other Financing Agreements, shall occur.

          19.    a default under any obligation or indebtedness owed by the
                 Borrower or any guarantor to the Lender under any Loan Document
                 or otherwise, or to any other lender, regardless of when
                 created or whether secured or unsecured.

     B.   Acceleration. If any one or more of the foregoing Events of Default
          shall occur, all unpaid principal of and accrued interest on the Note,
          together with all other amounts owing under this Agreement and the
          other Financing Agreements, shall automatically, at the option of the
          Lender, be immediately due and payable, notwithstanding anything to
          the contrary contained in the other Financing Agreements, without
          presentment, protest, demand or other notice of any kind.

     C.   Waivers. The Borrower hereby waives to the extent not prohibited by
          applicable law (a) all presentments, demands for performance, notices
          of nonperformance (except to the extent required by the provisions
          hereof or of any of the other Financing Agreements), protests and
          notices of dishonor, (b) any requirement of diligence or promptness on
          the Lender's part in the enforcement of its rights (but not
          fulfillment of its obligations) under the provisions of this Agreement
          or any of the other Financing Agreements, and (c) any and all notices
          of every kind and description which may be required to be given by any
          statute or rule of law and any defense of any kind which the Borrower
          may now or hereafter have with respect to its liability under this
          Agreement or under any of the other Financing Agreements.

     D.   Setoff. Regardless of the adequacy of any collateral for the Loan or
          other means of obtaining repayment of the Loan, any deposits (general
          or specific, time or demand, provisional or final, regardless of
          currency, maturity, or the branch of the Lender where such deposits
          are held), balances or other sums credited by or due from the Lender
          to the Borrower and any securities or other property of the Borrower
          in the



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<PAGE>


          possession of the Lender may, at any time and from time to time,
          without notice to the Borrower or compliance with any other condition
          precedent now or hereafter imposed by statute, rule of law, or
          otherwise (all of which are hereby expressly waived) be applied to or
          setoff against the payment of the Loan and any and all other
          liabilities, direct, or indirect, absolute or contingent, due or to
          become due, now existing or hereafter arising, of the Borrower to the
          Lender, in such manner as the Lender in its sole and absolute
          discretion may determine, and the Borrower hereby grants the Lender a
          continuing security interest in such deposits, balances or other
          sums for the payment and performance of the Loan.

     E.   Other Remedies. If any one or more of the foregoing Events of Default
          shall have occurred, and whether or not the Lender shall have
          accelerated the maturity of the Loan pursuant to Section VIII B
          hereof, the Lender may proceed to protect and enforce its rights and
          remedies under this Agreement, the Note or any of the other Financing
          Agreements by suit in equity, action at law or other appropriate
          proceeding, whether for the specific performance of any covenant or
          agreement contained in this Agreement and the other Financing
          Agreements or any instrument pursuant to which the Loan is evidenced,
          including as permitted by applicable law the obtaining of the ex parte
          appointment of a receiver, and, if any amount owed to the Lender shall
          have become due, by declaration or otherwise, proceed to enforce the
          payment thereof or any other legal or equitable right of the Lender.
          No remedy conferred upon the Lender or the holder of the Note in this
          Agreement or in any of the other Financing Agreements is intended to
          be exclusive of any other remedy and each and every remedy shall be
          cumulative and shall be in addition to every other remedy given
          hereunder or thereunder or now or hereafter existing at law or in
          equity or by statute or any other provision of law.

VII. MISCELLANEOUS PROVISIONS:

     A.   Books, Records, and Reports:

          1.   Borrower will at all times keep proper books of account in a
manner reasonably satisfactory to Lender. Borrower hereby authorizes Lender to
make or cause to be made, at Borrower's expense and in such manner and at such
times as Lender may require, (a) inspections and audits of any books, records
and papers in the custody or control of Borrower or others, relating to
Borrower's financial or business conditions, including the making of copies
thereof and extracts therefrom, and (b) inspections and appraisals of any of
Borrower's assets.

          2.   Promptly upon the Lender's request, the Borrower shall deliver
to Lender such documentation and information about the Borrower's financial
condition, business and/or operations as the Lender may, at any time and from
time to time, request, including without limitation, the following:


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<PAGE>

            (a) Annual fiscal year end independent CPA reviewed financial
                statements of Borrower, prepared in accordance with generally
                accepted accounting principles, and corporate tax returns for
                the twelve (12) month period ending December 31, and annually
                thereafter (no later than 3 months following the expiration of
                any such period).

            (b) Quarterly management-prepared financial statements for Borrower.

            (c) Copies of federal and state tax returns within 30 days of the
                filing thereof.

            (d) Tax Returns for Borrower.

            For purposes of this section, CPA audited financial statements shall
            include balance sheet, income statement, cash flow statement and all
            supporting footnotes and schedules (to include cost of goods sold);
            management prepared financial statements shall include income
            statement and balance sheet.

         3. Borrower hereby authorizes all Federal, State, and municipal
            authorities to furnish reports of examinations, records, and other
            information from reports, returns, files and records of such
            authorities upon request therefor by Lender.

     B.  Intentionally Deleted.

     C.  Business Organization. Borrower shall not in any way alter its form of
         business organization, or sell its business or all or substantially all
         of the Borrower's assets which are collateral for the Loan, except in
         the ordinary course of business, without the prior written consent of
         Lender.

     D.  Expenses. The Borrower agrees to pay all reasonable out-of-pocket
         expenses, costs, fees, charges, expenses and reasonable attorneys' and
         other professionals' fees and expenses incurred by the Lender in
         connection with the preparation of this Agreement, the Note, and all
         other Financing Agreements, and any amendments or supplements hereto
         and thereto, and all expenses (including reasonable fees and expenses
         of Lender's or other holder's counsel) incidental to the collection of
         monies due hereunder or thereunder and in any way connected with,
         involving or related to the preservation, enforcement, protection or
         defense of this Agreement, the Note, and/or the Financing Agreements,
         the collateral for this Loan, and the rights and remedies hereunder or
         thereunder.

     E.  Amendments and Waivers. Neither this Agreement, the Note, the
         Financing Agreements, nor any term, covenant or condition hereof or
         thereof may be changed,


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<PAGE>
         waived, discharged, modified or terminated except by a writing executed
         by the parties hereto or thereto. No course of dealing between the
         Borrower and the Lender or its employees shall be effective to change,
         modify or discharge any provision of this Agreement or to constitute a
         waiver of any event of default under the Loan.

     F.  Transfer of Lender's Interest. The Borrower hereby agrees that the
         Lender, in its sole discretion, may freely sell, assign or otherwise
         transfer participations, portions, co-lender interests or other
         interests in all or any portion of the indebtedness, liabilities or
         obligations arising in connection with or in any way related to the
         financing transactions of which this Agreement is a part. In the event
         of any such transfer, the transferee may, in the Lender's sole
         discretion, have and enforce all the rights, remedies and privileges of
         the Lender. The Borrower consents to the release by the Lender to any
         potential transferee of any and all information (including without
         limitation, financial information) pertaining to the Borrower as the
         Lender, in its sole discretion, may deem appropriate.

     G.  Waivers

         1. Prejudgment Remedy, Etc. THE BORROWER ACKNOWLEDGES THAT THE LOAN
            EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION AND WAIVES ITS RIGHT
            TO NOTICE AND HEARING ALLOWED BY ANY STATE OR FEDERAL LAW WITH
            RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE LENDER MAY DESIRE TO
            USE, AND FURTHER WAIVES ALL RIGHTS TO REQUEST THAT THE LENDER POST A
            BOND, WITH OR WITHOUT SURETY, TO PROTECT THE BORROWER OR ANY
            ENDORSER, GUARANTOR OR SURETY OF THE LOAN AGAINST DAMAGES THAT MAY
            BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY LENDER.
            THE BORROWER FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR
            PAYMENT, NOTICE OF NONPAYMENT, PROTEST AND NOTICE OF ANY RENEWALS OR
            EXTENSIONS.

         2. Jury Waiver. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT
            IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN
            CONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS
            OF WHICH THIS AGREEMENT IS A PART AND/OR THE ENFORCEMENT OF ANY OF
            THE LENDER'S RIGHTS, INCLUDING WITHOUT LIMITATION, TORT CLAIMS.

         3. Voluntary Nature of Waivers. THE BORROWER ACKNOWLEDGES THAT IT MAKES
            THE FOREGOING WAIVERS IN SUBSECTIONS 1 AND 2 ABOVE, KNOWINGLY,
            WILLINGLY, WITHOUT DURESS

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            AND VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS OF
            SUCH WAIVERS WITH ITS ATTORNEY.

     H.  Notices. All notices, requests, demands or other communications
         required by this Agreement shall be made in writing, and unless
         otherwise specifically provided herein, shall be deemed to have been
         duly given when delivered by hand or mailed first class mail postage
         prepaid, or, in the case of telecopy or facsimile notice, when
         transmitted, answer back received, addressed as follows, or to such
         other address as either party may designate in writing:

         If to the Lender:

         280 Trumbull Street
         Hartford, CT 06103
         Attn: Documentation Department

         If to the Borrower:

         Smith-Midland Corporation
         5119 Catlett Road
         Midland, Virginia 22728
         Attn: Rodney I. Smith

     I.  Section Headings, Severability. Section and subsection headings have
         been inserted herein for convenience only and shall not be construed as
         part of this Agreement. Every provision of this Agreement, the Note and
         the Financing Agreements is intended to be severable; if any term or
         provision of this Agreement, the Note, or the Financing Agreements
         shall be invalid, illegal or unenforceable for any reason whatsoever,
         the validity, legality and enforceability of the remaining provisions
         hereof or thereof shall not in any way be affected or impaired thereby.

     J.  Governing Law. This Agreement, the Note and the Financing Agreements,
         and all transactions, assignments and transfers hereunder and
         thereunder, and all the rights of the parties, shall be governed as to
         validity, construction, enforcement and in all other respects by the
         laws of the United States of America, and to the extent not pre-empted
         thereby, by the laws of the Commonwealth of Virginia (but not its
         conflicts of law provisions). The Borrower agrees that the Courts of
         the Commonwealth of Virginia or the United States District Court for
         the District of Virginia shall have jurisdiction to hear and determine
         any claims or disputes pertaining to the financing transactions of
         which this Agreement is a part and/or to any matter arising or in any
         way related to this Agreement or the Financing Agreements and the
         Borrower expressly submits and consents in advance to such jurisdiction
         in any action or proceeding.

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<PAGE>
     K.  Parties Affected. This Agreement shall be binding upon Borrower and
         Borrowers' successors and assigns and upon Guarantors and Guarantors'
         successors, assigns and/or personal representatives. The terms and
         conditions of this Agreement shall survive the closing and shall not be
         merged into the Financing Agreements notwithstanding any provisions to
         the contrary contained herein. Whenever used herein, the singular
         number shall include the plural, the plural the singular, and the use
         of the masculine, feminine, or neuter gender shall include all genders.
         Where there is more than one party referred to collectively, all
         representations, warranties and covenants shall be joint and several.

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

LENDER:

FIRST INTERNATIONAL BANK

By: /s/ Mitchell Smith                            Date: 12/20, 1999
   -------------------                                 -------
   Mitchell Smith
   Vice-President

Borrower hereby agrees to the conditions imposed herein and further agrees that
the terms and conditions herein are for the benefit of, and may be enforced by
Lender. This Agreement and any amendments hereto constitute the Agreement
between Lender and Borrower.

BORROWER:

SMITH-MIDLAND CORPORATION

By: /s/ Rodney I. Smith [SEAL]                    Date: 12-20, 1999
   --------------------                                -------
   Name:  Rodney I. Smith
   Title: President

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<PAGE>
STATE OF MARYLAND                      *
                                       *          to wit:
COUNTY OF BALTIMORE                    *

     I HEREBY CERTIFY that on this 20TH day of December, 1999, before me, the
undersigned Notary Public of the Baltimore County personally appeared Rodney
Smith and acknowledged Rodney I. Smith to be President of Smith-Midland
Corporation, a Virginia corporation, and that he as duly authorized President
being authorized to do so, executed the foregoing instrument for the purposes
therein contained by signing the name of SMITH-MIDLAND by Rodney I. Smith as
President.

     IN WITNESS MY Hand and Notarial Seal.


                                                 /s/ Patricia A. Davis (SEAL)
                                                 ----------------------------

My Commission Expires:

PATRICIA A. DAVIS, NOTARY
COMMISSION EXPIRES 6/22/02

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